Cazaly Resources Limited
ABN: 23 101 049 334
and
Controlled Entities
Annual Report
For the Year Ended
30 June 2012
CONTENTS
Cazaly Resources Limited Annual Report 2012
Corporate Directory
Directors’ Report
Auditors’ Independence Declaration
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Cash Flow Statement
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Additional Shareholder Information
Corporate Governance
Schedule of Tenements
1
2
21
22
23
24
25
26
63
64
66
68
74
CORPORATE DIRECTORY
Cazaly Resources Limited Annual Report 2012
MANAGING DIRECTOR
Nathan McMahon
MANAGING DIRECTOR
Clive Jones
NON-EXECUTIVE DIRECTOR
Kent Hunter
COMPANY SECRETARY
Julie Hill
PRINCIPAL & REGISTERED OFFICE
Level 2, 38 Richardson Street
WEST PERTH WA 6005
Telephone: (08) 9322 6283
Facsimile: (08) 9322 6398
AUDITORS
Bentleys
Level 1,
12 Kings Park Road
WEST PERTH WA 6005
SHARE REGISTRAR
Advanced Share Registry Services
150 Stirling Highway
NEDLANDS WA 6009
Telephone: (08) 9389 8033
Facsimile: (08) 9389 7871
STOCK EXCHANGE LISTING
Australian Securities Exchange
(Home Exchange: Perth, Western Australia)
Code: CAZ
BANKERS
National Australia Bank
50 St Georges Terrace
PERTH WA 6000
1
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2012
Your directors present their report, together with the financial statements of the company
and its controlled entities (“Consolidated Group”) for the financial year ended 30 June 2012.
1.
DIRECTORS
The names of directors in office at any time during or since the end of the year are:
Nathan McMahon
Clive Jones
Kent Hunter
Directors have been in office since the start of the financial year to the date of this
report unless otherwise stated.
COMPANY SECRETARY
Julie Hill (appointed 7 September 2011)
Ms Hill is a Chartered Accountant and Chartered Secretary and has extensive
experience in corporate financial management; administration and finance of ASX
listed companies and corporate governance.
Lisa Wynne held the position of company secretary until her resignation on 7 September
2011.
2.
PRINCIPAL ACTIVITIES
The principal activity of the Consolidated Group during the financial period was mineral
exploration.
There were no significant changes in the nature of the Consolidated Group’s principal
activities during the financial period.
3.
OPERATING RESULTS & FINANCIAL POSITION
The loss of the Consolidated Group after providing for income tax amounted to
($1,875,229) (2011: profit of $1,281,825).
The Group has $23.8 million in net assets as at 30 June 2012 (2011: $25.2m).
4.
DIVIDENDS PAID OR RECOMMENDED
The directors do not recommend the payment of a dividend and no amount has been
paid or declared by way of a dividend to the date of this report.
5.
REVIEW OF OPERATIONS
Parker Range (CAZ 100%)
Capacity Reservation Deed Executed, interim export solutions being examined.
Australian iron ore company Cazaly Resources Limited (ASX: CAZ) (“Cazaly” or “the
Company”) has further enhanced its logistics solutions for its Parker Range Iron Ore Project in
the Yilgarn region of Western Australia, through the signing of Capacity Reservation Deed
with the Esperance Port Authority and by appointing Engenium Limited to conduct a detailed
review of interim shipping options prior to the expansion at Esperance being completed.
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DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2012
The Parker Range project is the most advanced DSO resource in the Yilgarn with a published
Definitive Feasibility Study, (refer ASX announcement dated 12th May 2011). The project
greatly benefits from its close location to existing and accessible infrastructure including road,
rail, port, power and township.
Commenting on these developments, Cazaly Managing Director, Nathan McMahon said,
“These positive results now allow for the advancement of government and non-government
stakeholder consultation and the completion of discussions for financing.”
Capacity Reservation Deed with Esperance Port Authority
Cazaly entered into an agreement with Esperance Port Sea and Land (EPSL) for access to the
expanded Esperance Port, located in the Great Southern Region of Western Australia.
The agreement, a Capacity Reservation Deed, provides Cazaly with a five (5) million tonne
allocation at the Esperance Port, subject to the expansion occurring and commercial terms
being entered into between Cazaly and the operator of the proposed facility.
The proposed mining and export of Hematite DSO product from the port of Esperance is
planned to coincide with the completion of the infrastructure corridor to the port of
Esperance, being managed by the Western Australian Government, and the expansion of
the Port itself.
On 19 January 2012 Western Australian Minister for Transport, Hon Troy Buswell BEc MLA,
confirmed that export capacity at Esperance Port will potentially increase by up to 20 million
tonnes per annum (mtpa) in a staged plan, with the State Government formally committing
to expansion of the port.
Cazaly considers this landmark decision further enhances the economic value of the Parker
Range project and commends the State Government for advancing the interests of the
planned producers in the Yilgarn iron ore province.
Appointment of Engenium Limited as Project Manager
The Company has appointed Engenium Ltd (“Engenium”) as Project Manager, to review a
number of alternate interim options which will allow for development of the Parker Range Iron
Ore Project prior to the expansion of the Esperance Port.
Perth based Engenium are a leading Project Delivery company servicing the Resources,
Rail and Infrastructure sectors, They have extensive experience in the evaluation of logistics
solutions for a range of resources projects, so as to fast track projects into production and in
turn generate meaningful cash flow.
It is expected the Engenium review of the interim infrastructure options available to the
Company will be completed in this current quarter.
General Project Update
The Company has previously announced the final environmental approvals for the
development of the Parker Range Iron Ore Project (PRIOP) in the Yilgarn region of Western
Australia from the Western Australian Minister for the Environment, Hon. Bill Marmion MLA.
This approval, granted under section 45(1) of the Environmental Protection Act 1986, is
a significant milestone for the project and the Company and represents the culmination of
well over 12 months work by Cazaly. With the granting of this key approval, Cazaly is now in a
position to take a step closer to the development of the PRIOP. The Company now has an
extremely good understanding of the regional environmental, social and heritage values of
the project area, and will ensure that all conservation and environmental management
3
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2012
measures are fully integrated into the construction and operational planning phases of the
project.
The Company continues to work closely and cooperatively with the Western Australian
Government and local authorities to seek the best possible combination of infrastructure
solutions to enable the project to be developed as soon as possible. This includes both a
longer term expanded production profile based upon the planned expansion of the
Esperance port and a shorter term, lower tonnage solution. Cazaly has been greatly
encouraged by the commitments made by the State to increasing the export capacity at
the port of Esperance and to the commencement of upgrade works on the port access
corridor at Esperance.
The company continues to engage with potential partners for the project.
Earaheedy Joint Venture
Anglo American to commence drilling programme on Potential Major New Iron Ore Province
Cazaly and Vector Resources Limited (ASX:VEC) (collectively the Earaheedy Joint Venture,
“EJV”) previously announced a farm-in agreement with Anglo American (“Anglo”), the global
diversified mining house, covering a large part of EJV’s Earaheedy Iron project in the Wiluna
region of Western Australia.
EJV’s Earaheedy project covers an area in excess of 1,700km2 and includes a substantial strike
extent of the iron ore prospective Frere Formation. The Farm-In Agreement relates to an area
of approximately 890 km2.
WESTERN EARAHEEDY JV
EASTERN EARAHEEDY ANGLO JV
During the quarter, Anglo received results from a native title heritage survey conducted during
the last quarter allowing access for low impact activities on areas within E69/2064, E69/2065
and E69/2375. Some areas will require heritage monitors during exploration.
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DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2012
Anglo completed a 1:20,000 scale geological map and enrichment/mineralisation map on
the Cecil Rhodes Project (E69/2375), covering an area of ~200km2. Anglo geologists have
identified two iron rich units (‘Lower Iron Formation’, LIF and ‘Upper Iron Formation’, UIF). These
two iron rich units coincide with the interpretation from the aeromagnetic survey conducted
by Fugro in late 2011.
Three rock chip samples were collected and submitted to ALS Analytical Laboratories in Perth.
Detrital iron stones crop out sparsely and discontinuously in several areas proximal to good
hematite enrichment of the granular iron formation with Fe content up to 49.9%. A total of 11
samples were submitted to Minerex Petrographic Services for polished thin sections.
The first reverse circulation drilling campaign to be conducted by Anglo at the Earaheedy
Joint Venture (Cecil Rhodes Project) is scheduled to commence in late August. Permits have
been submitted and a high impact heritage survey completed.
WESTERN EARAHEEDY JV (CAZ/VEC 50:50)
Manganese Exploration E69/2063 (Blue Cliffs and Blue Nugget Prospects)
Twenty (20) RC drill holes for 1,523m were drilled within Exploration Licence E 69/2063 at the
Blue Cliffs and Blue Nugget manganese prospects during the quarter. Drilled holes tested the
near surface manganese mineralisation potential over a broad strike length of manganese
enriched outcrop of the Frere Formation.
All RC drill results have now been received. Low to moderate grade manganese enrichment
was intercepted at the Blue Cliffs Prospect interpreted to have enriched siltstone and chert
units within the Frere Formation. The manganese enriched intercepts are from 1-8m thick, and
grade up to 38.4% manganese (using a cut-off grade of 5% Mn). Manganese enrichment is
from surface or near surface and relatively flat-lying. Table 1 shows the enriched manganese
intersections from the drilling.
Table: Earaheedy Manganese Drill Intersections:
HoleID
East
North
Depth Azm Dip
From
To
Length Mn%
Fe
%
SiO2% Al2O3%
EARC0022
223781
7177472
60
270
-60
EARC0023
223689
7177546
EARC0024
223636
7177645
EARC0028
223863
7177914
60
60
60
Incl.
270
-60
270
-60
270
-60
EARC0029
223738
7177644
119
270
-60
EARC0032
223824
7177641
60
270
-60
EARC0033
223785
7177544
149
270
-60
2
2
0
3
22
12
16
23
14
4
3
1
4
25
13
18
24
15
2
1
1
1
3
1
2
1
1
32.95
14.9
7.14
1.09
38.40
13.0
9.4
2.1
24.40
13.8
13.06
2.47
24.30
9.7
18.11
1.38
26.13
14.0
12.08
1.56
20.20
10.7
15.02
4.67
20.65
17.1
13.60
2.15
23.80
9.9
18.44
0.94
27.40
9.1
15.94
1.11
Further work is being completed by the company to evaluate the potential of the prospects
to host further significant manganese mineralisation for follow-up.
5
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2012
Hamersley Iron Ore Project
(Cazaly currently 100%, reducing to 49% - Winmar Resources Ltd earning an initial 51% interest)
The following is an extract from Winmar Resources Ltd’s Quarterly Report for June 2012:
HIGHLIGHTS:
- Completion of a 4,012m RC drill program
-
-
Significant intercepts intersected in 13 holes
Highlight results include;
74m @ 59.15%Fe (60.5% Calcined Fe) from 28m within a CID zone of 102m
thickness.
-
Diamond Rig has commenced drilling for metallurgical samples from the Channel Iron
Deposit material
New Heritage survey completed
-
- Completion of second season Flora and vegetation study
Exploration and Development Plans
Winmar’s priorities for its 2012 works program at the Hamersley project are:
Defining the extent of the current Resource base
Extending the Resource base
Improving Metallurgical understanding at the project
Progressing infrastructure access negotiations
Native Title agreements, including Heritage agreements
Base line environmental studies
Defining new regional targets, and
Mining Plans
Latest Phase of Drilling completed
During the June quarter Winmar completed a 20 hole, 4012 metre RC drilling program at the
Hamersley project, and assay results from all holes have now been received. The drill program
returned excellent CID extensions at depth in a number of holes, and, as a result fewer holes
were required to be drilled than initially planned.
The majority of holes intersected Channel Iron Deposit (CID) material with the higher grade
and thicker zones occurring on the Northern side of the deposit. In total, 13 holes intersected
significant iron mineralisation. The project remains open in most directions and at depth.
Highlight results included;
• An outstanding shallow high grade intercept (from 28 metres) of; 74 metres @ 59.14% Fe
(60.47% Calcined Fe) in hole PLRC0162, within a broader Channel Iron Deposit (CID) zone
of 102 metres @ 56.00% Fe (58.33% Calcined Fe), and
• High grade intercepts of up to 28m @ 57.03% Fe (60.63% Calcined Fe) in hole PLRC0145,
along with mineralised CID zones of up to 90m @ 51.63% Fe (55.98% Calcined Fe) in hole
PLRC0154 on the northern extent of drilling.
A summary of the most significant intersections are presented in below.
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DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2012
Hole ID
From
To
Intercep
t
Fe %
SiO2% Al2O3%
P%
LOI%
Calcined
Fe%
PLRC0145
PLRC0147
Incl
PLRC0149
116
112
120
116
PLRC0151
90
Incl
PLRC0152
Incl
PLRC0153
PLRC0154
Incl
Incl
PLRC0157
Incl
106
112
126
130
140
170
190
112
114
PLRC0158
96
Incl
PLRC0159
Incl
PLRC0160
PLRC0161
PLRC0162
Incl
Incl
112
114
116
210
68
28
28
28
144
136
132
188
132
130
142
142
154
230
226
222
136
132
140
140
166
148
228
88
130
102
90
28m
24m
12m
8m
42m
24m
30m
16m
24m
90m
56m
32m
24
18
44
28
52
32
18
20
102
74
62
57.03
52.34
55.84
53.14
51.62
56.30
52.09
53.99
52.50
51.84
53.43
54.27
50.35
51.29
55.08
57.62
54.43
56.81
55.94
51.76
55.99
59.13
59.96
8.07
12.92
9.27
9.99
9.82
7.08
9.06
9.55
11.49
11.85
9.66
9.25
9.76
8.92
9.68
7.31
9.51
8.12
10.92
14.39
9.76
8.00
7.17
3.64
5.81
4.55
5.95
8.60
5.89
8.06
6.25
6.60
5.90
5.47
5.08
8.32
7.76
6.29
5.13
3.91
3.51
3.88
6.55
5.36
4.55
4.42
0.036
0.025
0.029
0.023
0.048
0.059
0.047
0.053
0.026
0.024
0.026
0.027
0.038
0.039
0.044
0.046
0.038
0.036
0.020
0.049
0.049
0.041
0.041
5.94
5.33
5.48
6.72
6.48
5.65
7.23
6.09
5.97
7.38
7.82
7.48
8.97
9.11
4.25
4.29
7.33
6.21
4.37
4.23
4.10
2.22
2.02
60.63
55.30
59.07
56.97
55.08
59.65
56.09
57.45
55.83
55.98
57.96
58.64
55.31
56.42
57.55
60.22
58.70
60.57
58.48
54.05
58.33
60.47
61.20
Significant intercepts from Detrital Overburden
Hole ID
From
PLRC0157
PLRC0158
PLRC0161
26
24
34
To
44
62
60
Intercept
Fe
SiO2
Al2O3
P
18
38
26
47.51
52.15
55.00
24.07
16.33
12.00
4.46
5.56
5.88
0.036
0.034
0.037
LOI
2.45
2.61
2.41
Calcined
Fe
48.70
53.55
56.36
CID mineralisation was logged in new drill holes up to 800 metres in distance from the current
resource, which was extremely encouraging. The results of this phase of drilling were designed
to deliver a significant Resource upgrade, due in Q3, which will be used to provide an
updated scoping study and as input for potential mining plans.
The current drilling was positioned on 400 metre spacings from previous drilling, and was
designed to test for extensions to mineralisation. Drill holes to the northern side and south west
of the previous resource have shown the most consistent extensions and mineralised zones.
Importantly these results are outside the area of the current resource.
Also, significant results from the overlying detrital material were returned in 3 holes in the
southwest of the deposit (Table above). These included; 26 metres @ 55.01% Fe (56.36%
Calcined Fe) in PLRC0161, from 34 metres depth. The south western zone of CID and high
grade Detrital material will be the initial focus of Winmar’s development plans for the deposit,
and may provide an early pathway to production of beneficiated material and DSO.
7
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2012
The current Hamersley project global inferred resource estimate is;
July 2011 Resource Estimate (COG: 40%Fe Detrital, 52%Fe Channel & Bedded)
Type
Tonnes
Detrital
Channel
Bedded
Total
Mt
29.1
169.3
43.2
241.6
Inferred Mineral Resource
Fe
%
47.1
55.6
54.0
54.3
Al2O3
%
5.6
4.1
4.5
4.3
P
%
0.03
0.04
0.05
0.04
SiO2
%
23.9
10.1
10.0
11.8
LOI
CaFe
%
2.6
5.7
7.4
5.6
%
48.3
59.0
58.3
57.6
CaFe (calcined iron) calculated by: (Fe% / (100-LOI%))*100
The Resource estimate was completed in July 2011 with results from just over half of the RC
drill program. All significant results were subsequently reported during 2011 and July 2012,
however many of the results were not included in the current model.
As a result of the successful exploration to date, with mineralisation remaining open in most
directions, the Exploration Target for the Project has been upgraded to 350-400mt @ 54-56% Fe
(57-60% CaFe) based on the potential for extensions to the known resource.
Beneficiation testing program
Metallurgical work commenced on PQ and Sonic core drilled during 2010 and 2011, to
determine the beneficiation potential of the CID and overlying detrital material. A diamond
drill program is now underway to provide further CID material for metallurgical testing. A
Bauer (large diameter) rig is also due to collect bulk samples of the detrital material, in late
July.
Preliminary ore characterization has been completed. A mineralogical study was also
completed during the quarter to provide valuable information on the ore composition and
impurity profile. The information has been used to design further metallurgical testing during
the next quarter. Preliminary metallurgical testing has indicated that there is potential for
beneficiation of the quaternary detrital material to produce a saleable product, as well as an
upgrading of the CID material.
Initial results suggest that gravity separating, following crushing and screening, may be
sufficient to upgrade the material to a more premium product. Further work will include using
bulk samples, up to 15Mt. Testing on smaller portions will be completed to define a flow-sheet,
and then a larger test will be completed to determine yields and grades of products.
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DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2012
Figure: Locaton of new significant intercepts 2012 drill program.
Environmental Survey
A second season level 2 Flora and Vegetation survey of M47/1450 was completed during April
in accordance with the Environmental Protection Authority’s (EPA) Guidance Statement 51
(Terrestrial Flora and Vegetation Surveys for Environmental Impact Assessment in Western
Australia). Planning for an initial Level 1 Fauna survey was completed during the June quarter
with the survey to proceed during the current quarter. A new heritage survey has now been
9
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2012
completed across an area immediately south of the FMG Zion deposit. Clearance for a new
programme of works is pending.
Joint Venture Projects
Huckitta JV – Cazaly diluting to 20% - Mithril Resources Ltd (ASX: MTH) earning 80%
The focus of Mithril’s work during the quarter was on EL25643 which forms the major part of
the newly defined Illogwa IOCG Target Area (IITA) where multiple outcropping copper
occurrences have recently been discovered by Mithril.
The IITA is now recognised as a ~50km long belt of anastomosing shear zones structures
variably characterised by siliceous veining and strong haematite, fluorite and copper
mineralisation. The area has not previously been explored for by modern exploration and is
considered to represent a major tectonic margin with the potential to host significant
copper-gold mineralisation. The mineralisation is consistent with structurally controlled iron–
oxide–copper-gold (IOCG) mineralising systems akin to those found within the world class
Mount Isa–Cloncurry District of North West Queensland.
Recent field activities have identified a number of new mineral occurrences during the
reporting period and include the Mini Me, El Gordo and Nigel copper prospects. At Mini Me
the surface expression of the mineralisation and alteration has been located sporadically
over a strike length of 2,000m and is from 2m to 50m wide, as observed by geological
mapping and analytical results. The copper bearing sulphide chalcopyrite has been
observed at a number of locations at surface at Mini Me suggesting a sulphide source for the
copper mineralisation.
The analytical results from eight grab samples taken from mineralised surface outcrops over a
800m strike extent at El Gordo returned copper values ranging from 0.7% to 12.6%, gold values
ranging up to 1.0g/t and silver values up to 12.5g/t. In addition to this a channel sample
where seven 1-metre continuous surface samples collected from a north-south oriented
traverse across one of the mineralised horizons at EL Gordo returned 7 metres grading 0.94%
copper.
A major soil sampling program also commenced on a 200m x 400m grid over the southeast
portion of EL25643 during the quarter. This program comprised ~800 samples and was
analyzed for base metals. This technique has worked well elsewhere in the IITA in locating
copper occurrences (ie Austin prospect). Analytical results are expected in late July.
Work planned for the next quarter includes shallow RC drill testing of existing prospects and
other targets followed by deeper RC and/or diamond drilling of selected prospects. This
drilling will commence once the results from a heritage survey completed during the quarter
are received (expected in late July). In addition to this work, geological mapping and
sampling will continue and an airborne EM survey (VTEM) is being considered over existing
mineralisation and associated structures.
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DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2012
Figure: Illogwa Copper Belt showing Reduced to Pole (RTP) magnetic image and
prospects
Figure: RTP magnetic image of Southeast portion of the Illogwa Copper belt showing
prospects, anomalous copper in rockchips and area of soil sampling
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DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2012
Figure: Fluorite, Massive Haematite and oxidized Chalcopyrite samples from
the Illogwa Project
New Project Generation
The Company has continued to review several exploration opportunities during the quarter
and has recently applied for an area prospective for gold mineralisation near the Binduli gold
project, Kalgoorlie.
The Company has also taken an option to acquire several tenement applications in Europe
targeting potential uranium mineralisation.
Competent Persons Statement
The information that relates to exploration targets, exploration results and drilling data of Cazaly
operated projects is based on information compiled by Mr Clive Jones and Mr Don Horn who are
Members of The Australasian Institute of Mining and Metallurgy and The Australian Institute of
Geoscientists respectively and are employees of the Company. The information in this report that
relates to the Winmar Deposit Resource Estimate is based on information compiled by Mr Craig Allison
who is a Member of the AusIMM and also a full-time employee of Runge Limited. Mr Jones, Mr Horn and
Mr Allison have sufficient experience which is relevant to the style of mineralisation and type of deposit
under consideration and to the activity which they are undertaking to qualify as a Competent Persons
as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves’. Mr Jones, Mr Horn and Mr Allison consent to the inclusion in their names in
the matters based on their information in the form and context in which it appears.
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DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2012
6.
FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES
The Consolidated Group will continue its mineral exploration activity at and around its
exploration projects with the object of identifying commercial resources.
identifying new mineral exploration
The Consolidated Group will also continue to
opportunities within Australia and the rest of the world for further potential acquisitions which
may offer value enhancing opportunities for shareholders.
7.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
The following significant changes in the state of affairs of the Consolidated Group occurred
during the financial period:
On 18 July 2011, the Company issued 1,000,000 ordinary shares to Director, Clive Jones
following the exercise of 1,000,000 30 cent Options expiring 30 June 2012.
In July 2011, the Company registered five wholly owned subsidiaries, Caz Yilgarn Pty Ltd; Baker
Fe Pty Ltd; Baldock Fe Pty Ltd; Hase Fe Pty Ltd and Lockett Fe Pty Ltd.
On 4 August 2011, the Company announced a conditional sale and an alliance arrangement
with an Investment Group over the Parker Range Iron Ore Project. The arrangement allowed
for an initial 45 day due diligence and exclusivity period. Subject to being satisfied with its
due diligence and the transaction proceeding, the Investment Group is entitled to be issued
with a convertible note in the principal amount of $5 million. The arrangement allowed for
the payment of an initial $40 million within 6 months of the execution of a formal Sale and
Purchase Agreement (“SPA”) and a further payment of $55 million upon the earlier of first iron
ore being explored or 24 months from signing the SPA. On 26 September 2011, the Company
announced it had reached mutual agreement with the Investment Group to extend the due
diligence and exclusivity period for the sale of the Parker Range Project by 45 days. Due
diligence is on-going however there is no longer exclusivity for the sale to the Investment
Group.
On 7 September 2011, the Company appointed Ms Julie Hill to the role of Company Secretary
following the resignation of Ms Lisa Wynne.
On 26 September 2011, the Company announced that Cazaly Resources Limited and Vector
Resources Limited (ASX:VEC) (collectively the Earaheedy Joint Venture (EJV) signed a farm-in
agreement with Anglo American, the global diversified mining house, covering part of EJV’s
Earaheedy Iron project in the Wiluna region of Western Australia. The Farm-In Agreement
relates to an area of approximately 890 km2 and allows for Anglo American to complete an
initial “proof of concept” program with a minimum of 7,500m of RC or diamond drilling to be
completed as due diligence within 18 months. Following this, Anglo American may earn an
initial 51% interest in the project by payment of an initial $1M in cash to the EJV and the
expenditure of $20M within 4 years. Anglo American may then earn a total 75% interest in the
project by the completion of a Bankable Feasibility Study (BFS) and payment of a further $5M
to the EJV. In addition, following delivery of a positive BFS, a success payment of $45M would
become payable by Anglo American to the EJV. The EJV may then elect to contribute to
project expenditure or dilute to a royalty of 1.25% FOB. Normal industry standard terms also
apply.
8.
AFTER BALANCE DATE EVENTS
On 22 August 2012 the Consolidated Group acquired 80% of the issued capital in Discovery
Minerals Pty Ltd (“Discovery”). Discovery, via its fully owned European subsidiary, has several
tenement applications in Europe targeting potential uranium mineralisation.
The purchase was satisfied by payments of $36,719 option fee and $200,000 for the 80% of the
issued capital. The financial effect of this transaction has not been brought into account in
the 2012 financial statements.
13
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2012
9.
ENVIRONMENTAL ISSUES
The Consolidated Group is aware of its environmental obligations with regards to its
exploration activities and ensures that it complies with all regulations when carrying out any
exploration work.
The directors have considered the enacted National Greenhouse and Energy Reporting Act
2007 (the NGER Act) which introduces a single national reporting framework for the reporting
and dissemination of information about the greenhouse gas emissions, greenhouse gas
projects, and energy use and production of corporations. At the current stage of
development, the directors have determined that the NGER Act will have no effect on the
Group for the current or subsequent financial year. The directors will reassess this position as
and when the need arises.
10.
INFORMATION ON DIRECTORS
Nathan McMahon
Managing Director (Corporate and Administration)
Qualifications
B.Com
Experience
Mr McMahon has provided tenement management advice to
the mining industry for approximately 16 years to in excess of 20
public listed mining companies. Mr McMahon has specialised in
native title negotiations, joint venture negotiations and project
acquisition due diligence. Mr McMahon is a Director of several
listed companies.
Interest in Shares and
Options
Fully Paid Ordinary Shares
$0.53 Options expiring on 18 October 2010 700,000
16,702,939
Clive Jones
Managing Director (Technical)
Qualifications
B.App.Sc(Geol), M.AusIMM.
Experience
Mr Jones has been involved in mineral exploration for over 25
years and has worked on the exploration for a range of
commodities including gold, base metals, mineral sands, uranium
and iron ore. Mr Jones is a Director of several ASX listed
companies. He is Chairman of Cortona Resources Ltd., joint
Managing Director of Cazaly Resources Ltd and Chairman of
Corazon Mining Ltd and a Director of Bannerman Resources Ltd.
Interest in Shares and
Options
Fully Paid Ordinary Shares
$0.53 Options expiring on 18 October 2012
9,563,862
100,000
14
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2012
INFORMATION ON DIRECTORS (Cont’d)
Kent Hunter
Non-Executive Director
Qualifications
B.Bus, CA.
Experience
Mr Hunter is a Chartered Accountant with over 16 years’
corporate and company secretarial experience. He has been
involved in the listing of over 20 exploration companies on ASX in
the past 9 years. He has experience in capital raisings, ASX
compliance and regulatory requirements and is currently a
director of Cazaly Resources Limited and is company secretary of
two other ASX Listed entities.
Interest in Shares and
Options
Fully Paid Ordinary Shares
-
2,052,103
Directorships of other listed companies
Directorships of other listed companies held by directors in the three years immediately
before the end of the financial year are as follows:
Name
Nathan McMahon Hodges Resources Limited
Company
Period of directorship
Since May 2008
From December 2009 to April 2012
From October 2010 to May 2011
From July 2008 to September 2009
From May 2005 to December 2009
Since February 2011
Since February 2005
Since January 2006
Since January 2007
Whinnen Resources Limited
Winmar Resources Limited
Catalyst Metals Limited
Universal Coal PLC
Dempsey Minerals Limited
Corazon Mining Limited
Cortona Resources Limited
Bannerman Resources
Limited
Red Emperor Resources NL
Cauldron Energy Limited
Venture Minerals Limited
Stratum Metals Limited
Western Manganese Limited Since June 2010
Carbon Conscious Limited
From 2 April 2007 to 1 August 2010
From November 2002 to 31 March 2011
From May 2006 to July 2009
Since December 2010
Since November 2010
Clive Jones
Kent Hunter
15
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2012
11.
REMUNERATION REPORT (Audited)
This report details the nature and amount of remuneration for each director of Cazaly
Resources Limited.
Remuneration Policy
The remuneration policy of Cazaly Resources Limited has been designed to align director
objectives with shareholder and business objectives by providing a fixed remuneration
component which is assessed on an annual basis in line with market rates. The board of
Cazaly Resources Limited believes the remuneration policy to be appropriate and effective in
its ability to attract and retain the best directors to run and manage the company, as well as
create goal congruence between directors and shareholders.
The board’s policy for determining the nature and amount of remuneration for board
members is set out below.
The remuneration policy, setting the terms and conditions for the executive directors and
other senior staff members, was developed by the managing directors and approved by the
board after seeking professional advice from independent external consultants.
In determining competitive remuneration rates, the Board seeks independent advice on local
and international trends among comparative companies and industry generally. It examines
terms and conditions for employee incentive schemes benefit plans and share plans.
Independent advice is obtained to confirm that executive remuneration is in line with market
practice and is reasonable in the context of Australian executive reward practices.
All executives receive a base salary (which is based on factors such as length of service and
experience), superannuation and fringe benefits.
The Consolidated Group is an exploration entity, and therefore speculative in terms of
performance. Consistent with attracting and retaining talented executives, directors and
senior executives are paid market rates associated with individuals in similar positions, within
the same industry.
The Board acquired and were issued shares as part of the terms of the Initial Public Offer in
2003. Board members have retained these securities which assist in aligning their objectives
with overall shareholder value.
Options have been issued to Board members to provide a mechanism to participate in the
future development of the Company and an incentive for their future involvement with and
commitment to the Company.
REMUNERATION REPORT (Cont’d)
Options and performance incentives will be issued in the event that the entity moves from an
exploration entity to a producing entity, and key performance indicators such as profits and
growth can be used as measurements for assessing Board performance.
12.
All remuneration paid to directors is valued at the cost to the Company and expensed or
carried forward on the balance sheet for time that is attributable to exploration and
evaluation. Shares given to directors and executives are valued as the difference between
the market price of those shares and the amount paid by the director or executive. Options
are valued using the Black-Scholes methodology.
16
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2012
REMUNERATION REPORT (Cont’d) (Audited)
The board policy is to remunerate non-executive directors at market rates for comparable
companies for time, commitment and responsibilities. The managing directors in consultation
with independent advisors determine payments to the non-executive directors and review
their remuneration annually, based on market practice, duties and accountability. The
maximum aggregate amount of fees that can be paid to non-executive directors is subject
to approval by shareholders at the Annual General Meeting. Fees for non-executive directors
are not linked to the performance of the Company. However, to align directors’ interests with
shareholder interests, all directors are encouraged to hold shares in the company.
Company Performance, Shareholder Wealth and Directors’ and Executives’ Remuneration
The remuneration policy has been tailored to
increase goal congruence between
shareholders and directors and executives. This has been achieved by the issue of shares to
the majority of the directors and executives to encourage the alignment of personal and
shareholder interest.
Details of Remuneration for Year Ended 30 June 2012
The remuneration for key management personnel of the company during the year was as
follows:
Short-term Benefits
Post-
Employ-
ment
Benefits
Other
Long-term
Benefits
Share based
Payment
Total
Performance
Related
Cash,
salary &
commiss
-ions
Cash
profit
share
Non-cash
Other
benefit
Super-
annuation
Other
Equity Options
$
$
$
$
$
$
$
Nathan McMahon – Managing Director (ii)
2012
180,000
2011
180,000
-
-
Clive Jones – Managing Director (iii)
2012
180,000
2011
180,000
-
-
-
-
-
-
Kent Hunter – Non Executive Director
2012
2011
27,250
27,250
-
-
-
-
Lisa Wynne – Company Secretary (iv)
2012
2011
-
-
-
-
Julie Hill – Company Secretary (v)
2012
2011
-
-
Total Remuneration
2012
387,250
2011
387,250
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
37,409
59,983
41,667
-
79,076
59,983
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(i)
$
-
-
-
-
-
-
$
%
180,000
180,000
180,000
180,000
27,250
27,250
37,409
-
-
-
-
-
-
-
20,173
80,156
25%
11,396
53,063
21%
-
-
-
11,396 477,722
20,173 467,406
2%
4%
The fair value of the Options is calculated at the date of grant using a Black-Scholes model.
i)
ii) An aggregate amount of $180,000 (2011:$ 180,000) was paid, or was due and payable to Kingsreef Pty Ltd, a
company controlled by Mr Nathan McMahon, for the provision of corporate and tenement management
services to the Company.
17
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2012
REMUNERATION REPORT (Cont’d) (Audited)
iii) An aggregate amount of $180,000 (2011:$ 180,000) was paid, or was due and payable to Widerange Corporation
Pty Ltd, a company controlled by Mr Clive Jones, for the provision of geological services to the Company.
iv) Fees of $2,409 (2011: $54,772) were paid to Sila Consulting Pty Ltd for the provision of company secretarial
services. Ms Wynne is a Director of Sila Consulting Pty Ltd. Fees of $35,000 were paid to Blue Horse Corporate Pty
Ltd for the provision of company secretarial services to the Company. Ms Wynne is a director and shareholder of
Blue Horse Corporate Pty Ltd.
v) Fees of $41,667 were paid the DZB Pty Ltd, a company controlled by Ms Hill, for the provision of company
secretarial services to the company.
Options issued as part of remuneration for the year ended 30 June 2012
No Options were issued to directors as part of their remuneration for the year ended 30 June
2012.
The following Options were issued to executives as part of their remuneration for the year
ended 30 June 2012. No cash consideration was paid by the recipients.
Number
Granted
Number
Vested
Grant
Date
Expiry
Date
Exercise
Price
$
Fair Value
at Grant
Date
$
J Hill
100,000
100,000 14.09.2011 14.09.2013
$0.40
0.114
Employment Contracts of Directors and Senior Executives
The employment conditions of the joint Managing Directors, Nathan McMahon and Clive
Jones, are each formalised in contracts of employment. These contracts commenced on 1
July 2010 and have terms of 3 years. The contracts provide Messrs.’ McMahon and Jones
with annual salaries of $180,000 each. The company may terminate these agreements at any
time and without prior notice if serious misconduct has occurred. In this event only the fixed
proportion of the remuneration is payable and only up until the date of the termination.
There is no formal contract finalized at the completion of the 30 June 2012 financial year for
the non-executive director. The non-executive director was paid under terms agreed to by a
directors’ resolution at $27,250 per year.
The employment contracts stipulate a range of one to three-month resignation periods. The
Consolidated Group may terminate an employment contract without cause by providing
one to three months written notice or making payment in lieu of notice, based on the
individual’s annual salary component.
Termination payments are not payable on resignation or under the circumstances of
unsatisfactory performance.
End of remuneration report.
18
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2012
12. MEETINGS OF DIRECTORS
The number of directors' meetings and resolutions held during the financial year each director
held office during the financial year and the number of meetings attended by each director
is:
Director
N McMahon
C Jones
K Hunter
Directors Meetings
Number Eligible to Attend
5
5
5
Meetings Attended
5
5
5
The Consolidated Group does not have a formally constituted audit committee as the board
considers that the company’s size and type of operation do not warrant such a committee.
13.
INDEMNIFYING OFFICERS OR DIRECTORS
In accordance with the constitution, except as may be prohibited by the Corporations Act
2001 every Officer, or agent of the Company shall be indemnified out of the property of the
Company against any liability incurred by him in his capacity as Officer or agent of the
Company or any related corporation in respect of any act or omission whatsoever and
howsoever occurring or in defending any proceedings, whether civil or criminal.
The Company has insurance policies in place for Directors and Officers insurance. The
premium paid on this policy was $15,540.
14. OPTIONS
Unissued Shares under Option
At the date of this report unissued ordinary shares of the Company under option are:
Expiry Date
Exercise Price
Number Under
Grant Date
18/10/2012
18/10/2012
18/10/2012
18/10/2012
26/10/2012
22/05/2013
14/09/2013
15/12/2013
18/03/2014
18/03/2014
11/01/2015
04/02/2015
$0.53
$0.53
$0.53
$0.53
$0.45
$0.30
$0.40
$0.28
$0.52
$0.52
$0.33
$0.49
Option
1,600,000
100,000
850,000
250,000
225,000
100,000
100,000
250,000
300,000
200,000
925,000
100,000
18/10/2010
04/11/2010
06/12/2010
14/12/2010
26/10/2007
22/05/2008
14/09/2011
15/12/2011
18/03/2011
15/04/2011
12/01/2010
05/02/2010
Option holders do not have any rights to participate in any issue of shares or other interests in
the Company or any other entity.
There have been no unissued shares or interest under option of any controlled entity within
the Consolidated Group during or since the reporting date.
For details of options issued to directors and executives as remuneration, refer to the
Remuneration Report.
19
DIRECTORS’ REPORT
14. OPTIONS (Cont’d)
Cazaly Resources Limited Annual Report 2012
During the year ended 30 June 2012, the following ordinary shares of Cazaly Resources Ltd
were issued on the exercise of options granted. No amounts are unpaid on any of the shares.
Grant Date
Exercise Price Number of Shares
Unlisted Options
Unlisted Options
13/11/2009
13/11/2009
$0.30
$0.25
Issued
1,000,000
500,000
No person entitled to exercise the option had or has any right by virtue of the option to
participate in any share issue of any other body corporate.
15. PROCEEDINGS ON BEHALF OF COMPANY
No person has applied for leave of Court to bring proceedings on behalf of the Company or
intervene in any proceedings to which the company is a party for the purpose of taking
responsibility on behalf of the company for all or any part of those proceedings.
The Consolidated Group was not a party to any such proceedings during the year.
16. AUDITORS INDEPENDENCE DECLARATION
The lead auditor’s independence declaration for the year ended 30 June 2012 has been
received and can be found on page 21 of the directors’ report.
17. NON AUDIT SERVICES
The board of directors is satisfied that the provision of non-audit services performed during the
year by the Group’s auditors is compatible with the general standard of independence for
auditors imposed by the Corporations Act 2001.
No other fees were paid or payable to the auditors for non-audit services performed during
the year ended 30 June 2012.
This report of the Directors, incorporating the Remuneration Report, is signed in accordance
with a resolution of the Board of Directors.
Nathan McMahon
Managing Director
28 September 2012
20
To The Board of Directors
As lead audit director for the audit of the financial statements of Cazaly Resources
Limited and Controlled Entities for the financial year ended 30 June 2012, I declare that
to the best of my knowledge and belief, there have been no contraventions of:
the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
any applicable code of professional conduct in relation to the audit.
Yours faithfully
BENTLEYS
Chartered Accountants
CHRIS WATTS CA
Director
DATED at PERTH this 28th day of September 2012
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For Year Ended 30 June 2012
Cazaly Resources Limited
Annual Report 2012
Revenue from continuing operations
Other Income
Employee benefits expense
Depreciation expense
Finance costs
Administrative expense
Legal Fees
Advertising and promotional expenses
Consultancy expenses
Compliance and Regulatory expenses
Occupancy expenses
Written-off exploration expenditure
Loss on disposal of shares
Loss on sale of tenements
Impairment of financial assets
Other expenses
Profit/(Loss) before income tax
Income tax (expense)/ benefit
Profit /(Loss) from continuing operations
Loss from discontinued operations after tax
Profit /(Loss) for the period
Other comprehensive income
Total comprehensive income attributable to
members of the parent entity
3
7
24
Note
2012
$
2011
$
2
2
730,459
1,495,020
1,738,608
5,924,380
(439,833)
(68,379)
(6,708)
(598,336)
(151,284)
(53,353)
(302,063)
(176,962)
(292,304)
(1,411,634)
(57,274)
-
(996,190)
(6,554)
(2,091,807)
216,578
(1,875,229)
-
(1,875,229)
-
(488,517)
(44,537)
(540,040)
(564,643)
(85,069)
(72,015)
(450,871)
(140,911)
(356,274)
(185,195)
(80,846)
(238,500)
-
(9,296)
4,162,686
(1,501,305)
2,661,381
(1,379,554)
1,281,825
-
(1,875,229)
1,281,825
Earnings/(loss) per share from continuing
and discontinued operations
Basic earnings/ (loss) per share
Diluted earnings per share
Earnings/(loss) per share from continuing
operations:
19
19
Cents
(1.53)
(1.53)
Cents
1.13
1.13
Basic earnings/ (loss) per share
Diluted earnings per share
19
19
(1.53)
(1.53)
2.34
2.34
Earnings/(loss) per share from discontinued
operations:
Basic earnings/ (loss) per share
Diluted earnings per share
19
19
-
-
(1.22)
(1.22)
The accompanying notes form part of these financial statements
22
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2012
Cazaly Resources Limited
Annual Report 2012
Note
2012
$
2011
$
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other assets
8
9
2,847,346
666,012
18,466
3,948,670
1,215,134
7,509
TOTAL CURRENT ASSETS
3,531,824
5,171,313
NON CURRENT ASSETS
Trade and other receivables
Financial assets
Property, plant and equipment
Exploration and evaluation assets
Deferred tax assets
Other assets
9
10
11
12
7
164,650
1,852,157
146,403
19,072,479
5,274,863
36,719
163,655
3,961,462
130,880
17,477,365
4,645,192
-
TOTAL NON CURRENT ASSETS
26,547,271
26,378,554
TOTAL ASSETS
30,079,095
31,549,867
CURRENT LIABILITIES
Trade and other payables
Provisions
13
14
468,764
82,432
934,274
81,099
TOTAL CURRENT LIABILITIES
551,196
1,015,373
NON CURRENT LIABILITIES
Deferred tax liabilities
7
5,755,748
5,311,600
TOTAL NON CURRENT LIABILITIES
5,755,748
5,311,600
TOTAL LIABILITIES
6,306,944
6,326,973
NET ASSETS
EQUITY
23,772,151
25,222,894
Issued capital
Reserves
Retained earnings/ (Accumulated
losses)
15
16
17
23,711,847
861,913
23,145,290
1,210,019
(801,609)
867,585
TOTAL EQUITY
23,772,151
25,222,894
The accompanying notes form part of these financial statements.
23
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2012
Cazaly Resources Limited
Annual Report 2012
Issued Capital (Accumulated
Losses)
And
Retained
Earnings
$
$
Option
Reserve
Total
$
$
Balance at 1 July 2010
20,348,703
(414,240)
613,744
20,548,207
Profit for the year
Other comprehensive
income for the year
Total comprehensive income
for the year
Transactions with owners, in
their capacity as owners, and
other transfers:
Shares issued during the year
Transaction costs
Option reserve
Transfers to retained earnings
Balance at 30 June 2011
Profit/(Loss) for the year
Other comprehensive
income for the year
Total comprehensive
income/(loss) for the year
Transactions with owners, in
their capacity as owners, and
other transfers:
Shares issued during the year
Option reserve
Tax effect of equity raising
cost
Balance at 30 June 2012
-
-
-
1,281,825
-
1,281,825
-
-
-
1,281,825
-
1,281,825
2,829,284
(2,348)
-
(30,349)
23,145,290
-
-
-
-
867,585
-
-
596,275
-
1,210,019
2,829,284
(2,348)
596,275
(30,349)
25,222,894
-
-
-
(1,875,229)
-
(1,875,229)
-
-
-
(1,875,229)
-
(1,875,229)
425,000
172,611
-
206,035
-
(348,106)
425,000
30,540
(31,054)
23,711,847
-
(801,609)
-
861,913
(31,054)
23,772,151
The accompanying notes form part of these financial statements
24
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 30 June 2012
Cazaly Resources Limited
Annual Report 2012
Note
2012
$
2011
$
Cash Flows from Operating Activities
Payments to suppliers and employees
Interest received
Other revenue
Payments for exploration and evaluation
(1,491,499)
157,614
525,201
(3,146,196)
(1,250,564)
181,166
568,270
(9,269,114)
Net cash used in operating activities
20
(3,949,880)
(9,770,242)
Cash Flows From Investing Activities
Proceeds from sale of exploration assets
Proceeds from sale of equity investments
Purchase of plant and equipment
Proceeds from sale of plant and
equipment
Purchase of equity investments
Proceeds from disposal of subsidiary
Recoupment of exploration expenditure
from Joint Venture operations
Proceeds for Joint Venture Management
24
994,956
1,723,909
(83,902)
-
(668,068)
-
456,016
4,162,402
162,469
(57,100)
4,573
(49,000)
1,380,000
1,923,055
645
97,121
Net cash provided by investing activities
2,423,556
7,623,520
Cash Flows from Financing Activities
Proceeds from borrowings
Repayment of borrowings
Proceeds from issue of securities
Payment for costs of issue of securities
Net cash provided by financing
activities
-
-
425,000
2,550,000
(2,672,145)
2,829,284
(2,349)
425,000
2,704,790
Net increase/(decrease) in cash held
(1,101,324)
558,068
Cash and cash equivalents at beginning
of the financial year
3,948,670
3,390,602
Cash and cash equivalents at end of the
financial year
8
2,847,346
3,948,670
The accompanying notes form part of these financial statements
25
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2012
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
These consolidated financial statements and notes represent those of Cazaly Resources
Limited and Controlled Entities (the “consolidated group” or “group”). Cazaly Resources
Limited is a listed public company, incorporated and domiciled in Australia.
The separate financial statements of the parent entity, Cazaly Resources Limited, have not
been presented within this financial report as permitted by the Corporations Act 2001.
The financial statements were authorised for issue on 28 September 2012 by the directors
of the company.
Basis of Preparation
The financial report is a general purpose financial report that has been prepared in
accordance with Australian Accounting Standards, Australian Accounting Interpretations,
other authoritative pronouncements of the Australian Accounting Standards Board and
the Corporations Act 2001. The Group is a for-profit entity for financial reporting purposes
under Australian Accounting Standards.
result
in financial statements containing
Australian Accounting Standards set out in accounting policies that the AASB has
concluded would
reliable
information about transactions, events and conditions. Compliance with Australian
Accounting Standards ensures that the financial statements and notes also comply with
International Financial Reporting Standards as issued by the IASB. Material accounting
policies adopted in the preparation of these financial statements are presented below
and have been consistently applied unless otherwise stated.
relevant and
Going Concern
These financial statements have been prepared on an accruals basis and are based on
historical costs, modified, where applicable, by the measurement at fair value of selected
non-current assets, financial assets and financial liabilities.
The financial report has been prepared on a going concern basis, which contemplates
the continuity of normal business activity and the realisation of assets and the settlement
of liabilities in the ordinary course of business.
The Group incurred a loss for the year of $1,875,229 (2011: Profit of $1,281,825) and net cash
outflows from operating of $3,949,880 (2011: $9,770,242).
The Group has lease and exploration commitments of $2,634,676 (2011: $920,427) due
within the next twelve months.
The directors have prepared a cash flow forecast, which indicates that the Group will
have sufficient cash flows to meet all commitments and working capital requirements for
the 12 month period from the date of signing this financial report. Based on the cash flow
forecasts and other factors referred to above, the directors are satisfied that the going
concern basis of preparation is appropriate because:
-
-
the Directors have an appropriate plan to raise additional funds as and when it is
required. In light of the Group’s current exploration projects, the Directors believe that
the additional capital required can be raised in the market; and
the Directors have an appropriate plan to contain certain operating and exploration
expenditure if appropriate funding is unavailable.
26
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2012
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(a) Principles of Consolidation
The consolidated financial statements incorporate the assets, liabilities and results of
entities controlled by the Company at the end of the reporting period. A controlled entity
is any entity over which the Company has the power to govern the financial and
operating policies so as to obtain benefits from the entity’s activities. Control will generally
exist when the parent owns, directly or indirectly through subsidiaries, more than half of the
voting power of an entity. In assessing the power to govern, the existence and effect of
holdings of actual and potential voting rights are also considered.
Where controlled entities have entered or left the Group during the year, the financial
performance of those entities are included only for the period of the year that they were
controlled. A list of controlled entities is contained in Note 22 to the financial statements.
In preparing the consolidated financial statements, all
inter-group balances and
transactions between entities in the Group have been eliminated on consolidation.
Accounting policies of subsidiaries have been changed where necessary to ensure
consistency with those adopted by the Company.
Non-controlling interests, being the equity in a subsidiary not attributable, directly or
indirectly, to a parent, are shown separately within the Equity section of the consolidated
statement of financial position and statement of comprehensive income. The non-
controlling interest in the net assets comprises their interests at the date of the original
business combination and their share of changes in equity since that date.
Business Combinations
Business combinations occur where an acquirer obtains control over one or more
businesses and results in the consolidation of its assets and liabilities.
A business combination is accounted for by applying the acquisition method, unless it is a
combination involving entities or businesses under common control. The acquisition
method requires that for each business combination on of the combining entities must be
identified as the acquirer i.e. parent entity). The business combination will be accounted
for as at the acquisition date, which is the date that control over the acquiree is obtained
by the parent entity. At this date, the parent shall recognise, in the consolidated
accounts, and subject to certain limited exceptions, the fair value of the identifiable assets
acquired and liabilities assumed. In addition, contingent liabilities of the acquiree will be
recognised where a present obligation has been incurred and its fair value can be reliably
measured.
The acquisition may result in the recognition of goodwill or a gain from a bargain
purchase. The method adopted for the measurement of goodwill will impact on the
measurement of a non-controlling interest to be recognised in the acquiree where less
than 100% ownership inters is held in the acquiree.
The acquisition date fair value of the consideration transferred for a business combination
plus the acquisition date fair value of any previously held equity interest shall form the cost
of the investment in the separate financial statements. Consideration may comprise the
sum of the assets transferred by the acquirer, liabilities incurred by the acquirer to the
former owners of the acquiree and the equity interests issued by the acquirer.
Fair value uplifts in the value of pre-existing equity holdings are taken to the statement of
comprehensive income. Where changes in the value of such equity holdings had
previously been recognised in other comprehensive income, such amounts are recycled
to profit or loss.
27
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2012
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
Included in the measurement of consideration transferred is any asset or liability resulting
from a contingent consideration arrangement. Any obligation incurred relating to
contingent consideration is classified as either a financial liability or equity instrument,
depending upon the nature of the arrangement. Rights to refunds of consideration
previously paid are recognised as a receivable. Subsequent to initial recognition,
contingent consideration classified as equity is not remeasured and its subsequent
settlement is accounted for within equity. Contingent consideration classified as an asset
or a liability is remeasured each reporting period to fair value through the statement of
comprehensive income unless the change in value can be identified as existing at
acquisition date.
All transaction costs incurred in relation to the business combination are expensed to the
statement of comprehensive income.
(b) Plant and Equipment
Plant and equipment are stated at cost less accumulated depreciation and impairment.
The carrying amount of plant and equipment is reviewed annually by directors to ensure
it is not in excess of the recoverable amount from these assets. The recoverable amount
is assessed on the basis of the expected net cash flows that will be received from the
asset’s employment and subsequent disposal. The expected net cash flows have been
discounted to their present values in determining recoverable amounts.
(c) Depreciation
Depreciation is provided on plant and equipment. Depreciation is calculated on a
straight line basis so as to write off the net cost or other revalued amount of each asset
over its expected useful life to its estimated residual value.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
Plant and equipment
Office furniture and equipment
Motor vehicle
Leasehold improvements
Depreciation Rate
40.0%
18.0%
22.5%
Term of Lease
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at
the end of each reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the
asset’s carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying
amount. These gains and losses are included in the statement of comprehensive income.
When revalued assets are sold, amounts included in the revaluation reserve relating to
that asset are transferred to retained earnings.
(d) Exploration, Evaluation and Development Expenditure
Costs incurred during exploration and evaluations relating to an area of interest are
accumulated. Costs are carried forward to the extent they are expected to be
recouped through successful development, or by sale, or where exploration and
evaluation activities have not yet reached a stage to allow a reasonable assessment
regarding the existence of economically recoverable reserves. In these instances the
28
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2012
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
entity must have rights of tenure to the area of interest and must be continuing to
undertake exploration operations in the area.
Accumulated costs carried forward in respect of an area of interest that is abandoned
are written off in full against profit in the year in which the decision to abandon the area
is made.
When production commences, the accumulated costs for the relevant area of interest
will be amortised over the life of the area according to the rate of depletion of the
economically recoverable reserves.
A regular review is undertaken of each area of interest to determine the appropriateness
of continuing to capitalise costs in relation to that area of interest.
Costs of site restoration are provided over the life of the project from when exploration
commences and are included in the costs of that stage. Site restoration costs include the
dismantling and removal of mining plant, equipment and building structures, waste
removal, and rehabilitation of the site in accordance with clauses of the mining permits.
Such costs have been estimated of future costs, current legal requirements and
technology on an undiscounted basis.
(e) Leases
Leases of fixed assets where substantially all the risks and benefits incidental to the
ownership of the asset, but not the legal ownership, are transferred to entities in the
consolidated group are classified as finance leases. Finance leases are capitalised by
recording an asset and a liability equal to the present value of the minimum lease
payments, including any guaranteed residual values. Leased assets are depreciated on
a straight-line basis over the shorter of their estimated useful lives or the lease term.
Lease payments for operating leases, where substantially all the risks and benefits remain
with the lessor, are charged as expenses in the periods in which they are incurred.
(f) Financial Instruments
instruments,
Initial Recognition and Measurement
Financial
liabilities, are
recognised when the entity becomes a party to the contractual provisions of the
instrument. Trade date accounting is adopted for financial assets that are delivered
within timeframes established by marketplace convention.
financial assets and
incorporating
financial
Financial instruments are initially measured at fair value plus transactions costs, except
where the instrument is classified as “at fair value through profit or loss”, in which case
transaction costs are expensed to profit or loss immediately.
Classification and Subsequent Measurement
Finance instruments are subsequently measured at either of fair value, amortised cost
using the effective interest rate method, or cost.
Fair value is determined based on current bid prices for all quoted investments. Valuation
techniques are applied to determine the fair value for all unlisted securities, including
recent arm’s length transactions, reference to similar instruments and option pricing
models.
29
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2012
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
Amortised cost is the amount at which the financial asset or financial liability is measured
at initial recognition less principal repayments and any reduction for impairment, and
adjusted for any cumulative amortisation of the difference between that initial amounts
calculated using the effective interest method.
The effective interest method is used to allocate interest income or interest expense over
the relevant period and is equivalent to the rate that exactly discounts estimated future
cash payments or receipts (including fees, transaction costs and other premiums or
discounts) through the expected life (or when this cannot be reliably predicted, the
contractual term) of the financial instrument to the net carrying amount of the financial
asset or financial liability. Revisions to expected future net cash flows will necessitate an
adjustment to the carrying value with a consequential recognition of an income or
expense in profit or loss.
The Group does not designate any interests in subsidiaries, associates or joint venture
entities as being subject to the requirements of accounting standards specifically
applicable to financial instruments.
(i) Financial assets at fair value through profit or loss
Financial assets classified as held for trading are included in the category ‘financial
assets at fair value through profit or loss’. Financial assets are classified as held for trading
if they are acquired for the purpose of selling in the near term. Derivatives are also
classified as held for trading unless they are designated as effective hedging instruments.
Gains or losses on investments held for trading are recognised in profit or loss.
(ii) Held-to-maturity investments
Non-derivative financial assets with fixed or determinable payments and fixed maturity
are classified as held-to-maturity when the Group has the positive intention and ability to
hold to maturity. Investments that are intended to be held-to-maturity, such as bonds,
are subsequently measured at amortised cost.
Held-to-maturity investments are included in non-current assets, except for those which
are expected to mature within 12 months after the end of the reporting period. (All other
investments are classified as current assets.)
(iii) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. Such assets are carried at amortised
cost using the effective interest method. Gains and losses are recognised in profit or loss
when the loans and receivables are derecognised or impaired, as well as through the
amortisation process.
Loans and receivables are included in current assets, except for those which are not
expected to mature within 12 months after the end of the reporting period. (All other
loans and receivables are classified as non-current assets).
(iv) Available-for-sale investments
Available-for-sale
investments are those non-derivative financial assets that are
designated as available-for-sale or are not classified as any of the three preceding
categories. They comprise investments in the equity of other entities where there is
neither a fixed maturity nor fixed or determinable payments.
They are subsequently measured at fair value with gains or losses being recognised in
other comprehensive income (except for impairment losses). When the financial asset is
derecognised, the cumulative gain or loss pertaining to that asset previously recognised
in other comprehensive income is reclassified into profit or loss.
30
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2012
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
Available-for-sale financial assets are included in non-current assets where they are
expected to be sold within 12 months after the end of the reporting period. All other
financial assets are classified as current assets.
(v) Financial liabilities
Non-derivative financial liabilities (excluding financial guarantees) are subsequently
measured at amortised cost.
Impairment
At the end of each reporting period, the Group assesses whether there is objective
evidence that a financial instrument has been impaired. In the case of available-for-sale
financial instruments, a prolonged decline in the value of the instrument is considered to
determine whether impairment has arisen. Impairment losses are recognised in profit or
loss. Also, any cumulative decline
in other
in fair value previously
comprehensive income is reclassified to profit or loss at this point.
recognised
Financial guarantees
Where material, financial guarantees issued, which require the issuer to make specified
payments to reimburse the holder for a loss it incurs because a specified debtor fails to
make payment when due, are recognised as a financial liability at fair value on initial
recognition. The Group has no such financial guarantees.
De-recognition
Financial assets are de-recognised where the contractual rights to receipt of cash flows
expires or the asset is transferred to another party whereby the entity no longer has any
significant continuing involvement in the risks and benefits associated with the asset.
Financial liabilities are de-recognised where the related obligations are discharged,
cancelled or expired. The difference between the carrying value of the financial liability
extinguished or transferred to another party and the fair value of consideration paid,
including the transfer of non-cash assets or liabilities assumed, is recognised in profit or
loss.
(g) Cash and Cash Equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with banks,
other short-term highly liquid investments with original maturities of three months or less,
and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current
liabilities on the statement of financial position.
(h) Trade and Other Receivables
Trade receivables, which generally have 30-90 day terms, are recognised and carried at
original invoice amount less an allowance for any uncollectible amounts. An allowance
for doubtful debts is made when there is objective evidence that the entity will not be
able to collect the debts. Bad debts are written off when identified.
(i) Revenue and Other Income
Revenue from the sale of goods is recognised upon the delivery of goods to customers.
Interest revenue is recognised on a proportional basis taking into account the interest
rates applicable to the financial assets. Revenue from the rendering of a service is
recognised upon the delivery of the service to the customers.
All revenue is stated net of the amount of goods and services tax (GST).
31
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2012
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(j) Impairment of Assets
At the end of each reporting period, the Group assesses whether there is any indication
that an asset may be impaired. The assessment will include the consideration of external
and internal sources of information including dividends received from subsidiaries,
associates or jointly controlled entities deemed to be out of pre-acquisition profits. If such
an indication exists, an impairment test is carried out on the asset by comparing the
recoverable amount of the asset, being the higher of the asset’s fair value less costs to
sell and value in use, to the asset’s carrying value. Any excess of the asset’s carrying
value over its recoverable amount is recognised immediately in profit or loss, unless the
asset is carried at a revalued amount in accordance with another standard (eg in
accordance with the revaluation model in AASB 116). Any impairment loss of a revalued
asset is treated as a revaluation decrease in accordance with that other standard.
Where it is not possible to estimate the recoverable amount of an individual asset, the
Group estimates the recoverable amount of the cash-generating unit to which the asset
belongs. Impairment testing is performed annually for goodwill and intangible assets with
indefinite lives.
(k) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where
the amount of GST incurred is not recoverable from the Australian Tax Office (“ATO”). In
these circumstances the GST is recognised as part of the cost of acquisition of the asset
or as part of an item of the expense. Receivables and payables in the statement of
financial position are shown inclusive of GST. The net amount of GST recoverable from, or
payable to, the ATO is included as a current asset or liability in the statement of financial
position.
Cash flows are included in the cash flow statement on a gross basis. The GST
components of cash flows arising from investing and financing activities which are
recoverable from, or payable to, the ATO are classified as operating cash flows.
(l)
Taxation
The income tax expense (revenue) for the year comprises current income tax expense
(income) and deferred tax expense (income).
Current income tax expense charged to the profit or loss is the tax payable on taxable
income calculated using applicable income tax rates enacted, or substantially enacted,
as at reporting date. Current tax liabilities (assets) are therefore measured at the amounts
expected to be paid to (recovered from) the relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax
liability balances during the year as well unused tax losses.
Current and deferred income tax expense (income) is charged or credited directly to
equity instead of the profit or loss when the tax relates to items that are credited or
charged directly to equity.
32
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2012
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
Deferred tax assets and liabilities are ascertained based on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the financial
statements. Deferred tax assets also result where amounts have been fully expensed but
future tax deductions are available. No deferred income tax will be recognised from the
initial recognition of an asset or liability, excluding a business combination, where there is
no effect on accounting or taxable profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to
apply to the period when the asset is realised or the liability is settled, based on tax rates
enacted or substantively enacted at reporting date. Their measurement also reflects the
manner in which management expects to recover or settle the carrying amount of the
related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are
recognised only to the extent that it is probable that future taxable profit will be
available against which the benefits of the deferred tax asset can be utilised.
Where temporary differences exist in relation to investments in subsidiaries, branches,
associates, and joint ventures, deferred tax assets and liabilities are not recognised where
the timing of the reversal of the temporary difference can be controlled and it is not
probable that the reversal will occur in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off
exists and it is intended that net settlement or simultaneous realisation and settlement of
the respective asset and liability will occur. Deferred tax assets and liabilities are offset
where a legally enforceable right of set-off exists, the deferred tax assets and liabilities
relate to income taxes levied by the same taxation authority on either the same taxable
entity or different taxable entities where it is intended that net settlement or simultaneous
realisation and settlement of the respective asset and liability will occur in future periods
in which significant amounts of deferred tax assets or liabilities are expected to be
recovered or settled.
Tax Consolidation
Cazaly Resources Limited and its wholly-owned Australian subsidiaries have formed an
income tax consolidated group under tax consolidation legislation. Each entity in the
group recognises its own current and deferred tax assets and liabilities. Such taxes are
measured using the ‘stand-alone taxpayer’ approach to allocation. Current tax liabilities
(assets) and deferred tax assets arising from unused tax losses and tax credits in the
subsidiaries are immediately transferred to the head entity. The group notified the
Australian Tax Office that it had formed an income tax consolidated group to apply from
1 July 2004.
(m) Trade and Other Payables
Trade payables and other payables are carried at amortised costs and represent
liabilities for goods and services provided to the company prior to the end of the
financial year that are unpaid and arise when the company becomes obliged to make
future payments in respect of the purchase of these goods and services.
(n) Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a
result of past events, for which it is probable that an outflow of economic benefits will
result and that outflow can be reliably measured.
The amount recognised as a provision is the best estimate of the consideration required
to settle the present obligation at reporting date, taking into account the risks and
uncertainties surrounding the obligation. Where a provision is measured using the cash
33
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2012
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
flows estimated to settle the present obligation, its carrying amount is the present value
of those cash flows.
(o) Share Based Payments
The Group operates equity-settled share-based payment employee share and option
schemes. The fair value of the equity to which employees become entitled is measured
at grant date and recognised as an expense over the vesting period, with a
corresponding increase to an equity account. Share-based payments to non-
employees are measured at the fair value of goods or services received or the fair value
of the equity instruments issued, if it is determined the fair value of the good or services
cannot be reliably measured, and are recorded at the date the goods or services are
received. The corresponding amount is shown in the option reserve.
The fair value of shares is ascertained as the market bid price. The fair value of options is
ascertained using a Black–Scholes pricing model which incorporates all market vesting
conditions. The number of shares and options expected to vest is reviewed and adjusted
at the end of each reporting period such that the amount recognised for services
received as consideration for the equity instruments granted shall be based on the
number of equity instruments that eventually vest.
(p) Issued Capital
Issued and paid up capital is recognised at the fair value of the consideration received
by the Company. Any transaction costs arising on the issue of ordinary shares are
recognised directly in equity as a reduction of the share proceeds received.
(q) Earnings Per Share
Basic earnings per share is calculated as net earnings attributable to members, adjusted
to exclude costs of servicing equity (other than dividends) and preference share
dividends, divided by the weighted average number of ordinary shares, adjusted for an
bonus element.
Diluted earnings per share is calculated as net earnings attributable to members,
adjusted for:
costs of servicing equity (other than dividends) and preference share dividends; the after
tax effect of dividends and interest associated with dilutive potential ordinary shares that
would have been recognised as expenses; and other non-discretionary changes in
revenues or expenses during the period that would result from the dilution of potential
ordinary shares; divided by the weighted average number of ordinary shares and dilutive
potential ordinary shares, adjusted for any bonus element.
(r) Employee Benefits
Provision is made for the company’s liability for employee benefits arising from services
rendered by employees to the end of the reporting period. Employee benefits that are
expected to be settled within one year have been measured at the amounts expected
to be paid when the liability is settled, plus related on-costs. Employee benefits payable
later than one year have been measured at the present value of the estimated future
cash outflows to be made for those benefits.
34
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2012
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(s) Royalty Assets
Royalty assets are valued in the accounts at cost of acquisition and are amortised over
the period in which their benefits are expected to be realised. The balances are
reviewed annually and any balance representing future benefits for which the realisation
is considered to be no longer probable are written off.
(t) Critical Accounting Estimates and Judgements
The preparation of financial statements requires management to make judgements,
estimates and assumptions that affect the application of accounting policies and the
reported amounts of assets, liabilities, income and expenses. Actual results may differ
from these estimates. Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the period in which the
estimate is revised and in any future periods affected.
The directors evaluate estimates and judgments incorporated into the financial report
based on historical knowledge and best available current information. Estimates assume
a reasonable expectation of future events and are based on current trends and
economic data, obtained both externally and within the group.
Key Judgements –Exploration and evaluation expenditure
Exploration and evaluation costs are carried forward where right of tenure of the area of
interest is current. These costs are carried forward in respect of an area that has not at
balance sheet date reached a stage that permits reasonable assessment of the
existence of economically recoverable reserves, refer to the accounting policy stated in
note 1(d).
Key Judgements Share based payment transactions
The Company measures the cost of equity-settled transactions with employees by
reference to the fair value of the equity instruments at the date at which they are
granted. The fair value is determined by an internal valuation using a Black-Scholes
option pricing model, using the assumptions detailed in note 28.
Key Judgments – Environmental Issues
Balances disclosed in the financial statements and notes thereto are not adjusted for any
pending or enacted environmental legislation, and the directors understanding thereof.
At the current stage of the company’s development and its current environmental
impact the directors believe such treatment is reasonable and appropriate.
Key Estimate – Taxation
Balances disclosed in the financial statements and the notes thereto, related to taxation,
are based on the best estimates of directors. These estimates take into account both the
financial performance and position of the company as they pertain to current income
taxation legislation, and the directors understanding thereof. No adjustment has been
made for pending or future taxation legislation. The current income tax position
represents that directors’ best estimate, pending an assessment by the Australian
Taxation Office.
35
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2012
2. REVENUE & OTHER INCOME
Revenue
interest received
option fees
-
-
- management fees
-
-
recoupment of office costs on-charged
other revenue
Other Income
- profit on sale of tenement
-
contingent payment received on sale of
subsidiary in prior year
research & development tax refund
net gain on financial assets at fair value through
profit or loss
-
-
- held for trading
3. PROFIT (LOSS) FOR THE YEAR
Profit (loss) before income tax from continuing operations
Includes the following specific expenses:
Expenses
other persons
Borrowing costs
-
- director related entities
-
share based payment
Depreciation of non-current assets
- plant and equipment
- motor vehicle
Rental expense on operating leases
- minimum lease payments
Loss on sale of tenements
Net loss on financial assets held for trading
Exploration expense written off
Employee benefits:
-
-
Superannuation benefits
Employee equity settled benefits
2012
$
2011
$
183,972
137,501
645
408,341
-
730,459
457,455
400,000
881,153
179,093
650,545
97,121
338,261
230,000
1,495,020
5,393,636
-
-
-
530,744
1,738,608
5,924,380
-
-
-
-
56,569
11,810
68,379
90,958
40,817
408,265
540,040
29,353
15,184
44,537
178,419
21,520
-
57,274
1,411,634
19,345
30,527
238,500
80,846
185,195
16,290
156,549
36
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2012
4.
INTERESTS OF KEY MANAGEMENT PERSONNEL (“KMP”)
Refer to the remuneration report contained in the directors’ report for details of the
remuneration paid or payable to each member of the Group’s key management
personnel for the year ended 30 June 2012.
The totals of remuneration paid to key management personnel of the Company during the
year are as follows:
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Share based payments
No compensation was paid in respect to termination benefits
b) KMP Shareholdings
2012
$
466,326
-
-
11,396
477,722
2011
$
447,233
-
-
20,173
467,406
The number of ordinary shares in Cazaly Limited held by each KMP of the Group during
the financial year is as follows:
30 June 2012
N McMahon
C Jones
K Hunter
30 June 2011
N McMahon
C Jones
K Hunter
Balance
1 July 2011
Granted as
Remuneration
Options
Exercised
Net Change
Other
Balance
30 June 2012
14,463,530
8,563,862
2,052,103
25,079,495
-
-
-
-
-
1,000,000
-
1,000,000
1,749,409
-
-
1,749,409
16,212,939
9,563,862
2,052,103
27,828,904
Balance
1 July 2010
Granted as
Remuneration
Options
Exercised
Net Change
Other
Balance
30 June 2011
9,526,554
7,566,802
1,830,757
18,924,113
-
-
-
-
1,678,803
850,002
221,346
2,750,151
3,258,173
147,058
-
3,405,231
14,463,530
8,563,862
2,052,103
25,079,495
37
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2012
5.
INTERESTS OF KEY MANAGEMENT PERSONNEL (KMP) (cont’d)
c) KMP Option and Rights Holdings
The number of options over ordinary shares held by each KMP of the Group during the
financial year is as follows.
Number Options held by Directors and Executives:
Balance
1 July 2011
700,000
1,100,000
250,000
325,000
-
-
-
-
Nathan
McMahon
Clive Jones
Kent Hunter
Lisa Wynne
Julie Hill
Issued
Exercised
Lapsed
Vested
during
the
year
Vested
and
exercisable
Vested
and
unexerc
is-able
Balance
30 June
2012
700,000
100,000
-
(1,000,000)
-
-
-
-
(250,000)
-
325,000
-
-
-
-
700,000
100,000
-
325,000
-
100,000
100,000
100,000
100,000
2,375,000
100,000
(1,000,000)
(250,000)
1,225,000
100,000
1,225,000
-
-
-
-
-
-
d) Compensation Options
No compensation options were issued to directors or executives for the reporting period ending 30 June
2012.
e) Shares issued on exercise of compensation options
Date of exercise of options
Number of ordinary shares issued
on exercise of options during the
year
N McMahon
C Jones
K Hunter
2012
-
18 July 2011
-
2011
25 August 2010
-
-
2012
1,000,000
-
2011
1,000,000
-
-
f) Other KMP transactions
During the year ended 30 June 2011, directors N McMahon and C Jones provided a bridging
facility, in conjunction with other sophisticated investors. The terms of the facility included an
interest (cash paid) component and an equity component. For details of interest paid, refer
to Note 3, for details of the equity based payment refer to Note 28. All loans were on the
same arm’s length transactions as those made to other sophisticated investors.
6.
AUDITORS’ REMUNERATION
Remuneration of the auditor for:
- Auditing or reviewing the financial report
2012
$
2011
$
65,965
65,965
64,142
64,142
38
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2012
7.
INCOME TAX EXPENSE
The components of the tax expense/(income) comprise:
Current tax
Deferred tax
(a) Numerical reconciliation of income tax expense to prima
facie tax payable:
Profit from continuing operations
Loss from discontinuing operations
Prima facie tax benefit on loss from ordinary activities
before income tax at 30% (2011: 30%)
2012
$
2011
$
(216,578)
(216,578)
-
1,501,305
1,501,305
(2,091,807)
-
4,162,686
(1,379,554)
(627,542)
834,940
Add:
Tax effect of:
Derecognition of losses on sale of subsidiary
Movement in unrecognised temporary differences
Under provision in prior year
Other non-allowable items
-
355,090
284,398
65,809
865,399
-
384,399
Less:
Tax effect of:
Tax benefit of deductible equity raising costs
Non-assessable income
Recognition of previously unrecognised prior year
tax losses
Income tax benefit attributable to entity
(31,054)
(263,279)
-
(216,578)
(31,054)
-
(552,379)
1,501,305
39
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2012
7.
INCOME TAX EXPENSE (Cont’d)
(b) Deferred tax assets at 30% (2011: 30%) comprise
the following
Carry forward revenue losses
Carry forward capital losses
Unrealised Fair Value Adjustment
Capital raising and future black hole deductions
Provisions and accruals
Other
Deferred tax liabilities at 30% (2011: 30%) comprise
the following
Exploration expenditure
Investments
Other
(c) Deferred tax recognised directly in equity:
Relating to equity raising costs
Other
(d) Unrecognised deferred tax assets at 30% (2011:
30%) comprise the following:
Deferred tax assets have not been recognized in
respect to the following as they are not
considered to have met the recognition criteria:
Investments
Other
8.
CASH AND CASH EQUIVALENTS
Cash at bank
Petty cash
Deposits at call (i)
2012
$
2011
$
4,824,131
-
-
104,937
265,701
80,094
5,274,863
4,042,781
-
141,416
194,397
40,836
225,762
4,645,192
5,746,113
-
9,635
5,755,748
5,224,653
85,089
1,858
5,311,600
(31,054)
(30,349)
-
-
(31,054)
(30,349)
355,090
-
355,090
-
-
-
313,432
495
2,533,419
2,847,346
819,854
495
3,128,321
3,948,670
(i) The effective interest rate on short-term bank deposits was 5.67% (2011:5.31%); these deposits-
have an average maturity of 96 days.
9.
TRADE AND OTHER RECEIVABLES
Current
Trade receivables
Other debtors
Non-Current
Bonds (i)
(i) Bonds are term deposits, held by way of bank guarantee.
Trade receivables have 30 to 90 day terms
67,082
598,930
666,012
380,976
834,158
1,215,134
164,650
164,650
163,655
163,655
40
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2012
10. FINANCIAL ASSETS
Current
Financial assets, at fair value through profit or loss:
Held-for-trading Australian listed shares
11. PROPERTY, PLANT AND EQUIPMENT
2012
$
2011
$
1,852,157
1,852,157
3,961,462
3,961,462
Land & Property at Cost
5,000
-
Plant and Equipment
At cost
Accumulated depreciation
Office Furniture and Equipment
At cost
Accumulated depreciation
Motor Vehicle
At cost
Accumulated depreciation
Leasehold Improvement
At cost
Accumulated amortisation
293,796
(212,626)
81,170
229,076
(166,991)
62,085
42,703
(23,149)
19,554
68,287
(27,608)
40,679
5,344
(5,344)
-
32,803
(16,497)
16,306
68,287
(15,798)
52,489
5,344
(5,344)
-
146,403
130,880
Movement in the carrying amounts for each class of plant and equipment between the
beginning and end of the current financial year.
41
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2012
11.
PROPERTY, PLANT AND EQUIPMENT (Cont’d)
Land &
Property
Plant and
Equipment
2012
$
Office
Furniture
Motor
Vehicles
Total
Balance at the beginning of the
year
• Additions
• Disposals
• Depreciation expense
Carrying amount at the end of
the year
-
5,000
-
-
5,000
62,085
71,786
(7,065)
(45,636)
16,306
7,117
-
(3,869)
52,489
-
-
(11,810)
130,880
83,903
(7,065)
(61,315)
81,170
19,554
40,679
146,403
Land &
Property
Plant and
Equipment
2011
$
Office
Furniture
Motor
Vehicles
Total
Balance at the beginning of the
year
• Additions
• Disposals
• Depreciation expense
Carrying amount at the end of
the year
-
-
-
-
-
31,898
57,100
(1,249)
(25,664)
23,318
-
(3,324)
(3,688)
67,674
-
-
(15,185)
122,890
57,100
(4,573)
(44,537)
62,085
16,306
52,489
130,880
12. EXPLORATION, EVALUATION AND
DEVELOPMENT COSTS
2012
$
2011
$
Non-Current
Costs carried forward in respect of areas of
interest in:
Exploration and evaluation phases at cost
Royalty assets
Movement – exploration and evaluation
Brought forward
Exploration expenditure capitalised during the
year
Disposals
Recoupment of exploration expenditure from
joint venture partners
Assets classified as non-current assets held for
sale
Exploration expenditure written off
19,072,479
17,477,365
-
19,072,479
17,477,365
17,477,365
12,036,805
3,027,119
-
8,594,268
(557,494)
(20,371)
(2,411,019)
-
(1,411,634)
-
(185,195)
19,072,479
17,477,365
The value of the Consolidated Group interest in exploration expenditure is dependent upon:
•
the continuance of the Consolidated group rights to tenure of the areas of interest;
•
the results of future exploration; and
•
the recoupment of costs through successful development and exploitation of the areas of
interest, or alternatively, by their sale.
The Consolidated group exploration properties may be subjected to claim(s) under native title, or
contain sacred sites, or sites of significance to Aboriginal people. As a result, exploration properties
or areas within the tenements may be subject to exploration restrictions, mining restrictions and/or
claims for compensation. At this time, it is not possible to quantify whether such claims exist, or the
quantum of such claims.
42
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2012
13. TRADE AND OTHER PAYABLES
Current
Trade creditors
Other creditors and accrued expenses
2012
$
2011
$
344,460
124,304
468,764
860,551
73,723
934,274
(i) Creditors are non-interest bearing and settled at 30 day terms.
14. PROVISIONS
Current
Provision for annual leave
Provision for long service leave
15.
ISSUED CAPITAL
48,571
33,861
82,432
52,631
28,468
81,099
122,589,125 fully paid ordinary shares (2011:
121,089,125) with no par value
23,711,847
23,145,290
a. Movements in Ordinary Shares
Number of
shares
Issue
price
$
Opening balance at 1 July 2011
Notes
121,089,125
23,145,290
Unlisted options exercised
Unlisted options exercised
Option reserve
Tax effect of equity raising costs
(i)
(ii)
(iii)
1,000,000
500,000
$0.30
$0.25
300,000
125,000
172,611
(31,054)
Closing balance at 30 June 2012
122,589,125
23,711,847
(i)
(ii)
(iii)
On 15 July 2011, the Company issued 1,000,000 ordinary shares to Director, Clive Jones
following the exercise of 1,000,000 unlisted options exercisable at 30 cents each.
On 11 October 2011, the Company issued 500,000 ordinary shares following the exercise of 5
00,000 unlisted options exercisable at 25 cents each.
Deferred tax recognised directly in equity relating to equity raising costs.
Ordinary shares participate in dividends and the proceeds on winding up of the Company in
proportion to the number of shares held and in proportion to the amount paid up on the shares held.
At shareholders meetings each ordinary share is entitled to one vote in proportion to the paid up
amount of the share when a poll is called, otherwise each shareholder has one vote on a show of
hands.
43
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2012
15.
ISSUED CAPITAL (Cont’d)
b. Capital risk management
Management controls the capital of the Group when managing capital their
intentions are to safeguard their ability to continue as a going concern, so that they
may continue to provide returns for shareholders and benefits for other stakeholders.
Due to the nature of the Group’s activities, being mineral exploration, the Group does
not have ready access to credit facilities, with the primary source of funding being
equity raisings. Therefore, the focus of the Group’s capital risk management is the
current working capital position against the requirements of the Group to meet
exploration programmes and corporate overheads. Management’s strategy is to
ensure appropriate
to meet anticipated operating
requirements, with a view to initiating appropriate capital raisings as required.
is maintained
liquidity
The working capital position of the Group at 30 June 2012 and 30 June 2011 are as
follows:
e
Cash and cash equivalents
Trade and other receivables
Financial assets
Trade and other payables
Working capital position
16. OPTION RESERVE
2012
$
2,847,346
666,012
1,852,157
(468,764)
4,896,751
2011
$
3,948,670
1,215,134
3,961,462
(934,274)
8,190,992
2012
$
861,913
2011
$
1,210,019
This reserve is used to record the value of equity benefits provided to the employees and
directors as part of their remuneration.
17. RETAINED EARNINGS/ (ACCUMULATED
LOSSES)
Opening balance
Net profit/(loss) attributable to members
Transfers from option reserve
Closing balance
2012
$
2011
$
867,585
(1,875,229)
206,035
(801,609)
(414,240)
1,281,825
-
867,585
44
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2012
18. FINANCIAL RISK MANAGEMENT
The Group’s principal financial instruments comprise receivables, payables, held-for-trading
investments, cash and short-term deposits.
The Board of Directors has overall responsibility for the oversight and management of the
Group’s exposure to a variety of financial risks (including fair value interest rate risk, credit risk,
liquidity risk and cash flow interest rate risk).
The Group’s overall risk management program focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects on the financial performance of the
Group.
Interest rate risks
The Group’s exposure to market interest rates relates to cash deposits held at variable rates.
The Board constantly analyses its interest rate exposure. Within this analysis consideration is
given to potential renewals of existing positions.
Credit risk
The maximum exposure to credit risk at balance date is the carrying amount (net of provision
of doubtful debts) of those assets as disclosed in the Statement of Financial Position and notes
to the financial statements. The Consolidated group has adopted a policy of only dealing
with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a
means of mitigating the risk of financial loss from defaults. The Group’s exposure and the credit
ratings of its counterparties are continuously monitored and the aggregate value of
transactions concluded is spread amongst approved counterparties.
Credit risk related to balances with banks and other financial institutions is managed by the
board. The board’s policy requires that surplus funds are only invested with counterparties
with a Standard & Poor’s rating of at least A+. All of the Group’s surplus funds are invested
with AA and A+ Rated financial institutions, the amount is $2,847,346 (2011: $3,948,670).
Liquidity risk
The responsibility for liquidity risk management rests with the Board of Directors. The
Consolidated group manages liquidity risk by maintaining sufficient cash or credit facilities to
meet the operating requirements of the business and investing excess funds in highly liquid
short term investments.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest
rates and equity prices will affect the Group’s income or the value of its holdings of financial
instruments. The objective of market risk management is to manage and control market risk
exposures within acceptable parameters, while optimising the return.
45
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2012
18. FINANCIAL RISK MANAGEMENT (Cont’d)
Maturity profile of financial instruments
The following table details the Group’s exposure to interest rate risk as at 30 June 2012:
2012
Floating
Interest
Rate
$
Fixed
Interest
maturing
in 1 year
or less
$
Fixed
Interest
maturing
over 1 to 5
years
$
313,432
2,533,419
-
-
164,650
-
313,432
2,698,069
-
5.57%
-
-
-
-
-
Financial assets
Cash and cash
equivalents
Trade and other
receivables
Financial assets –
held for trading
Weighted average
Interest rate
Financial Liabilities
Trade and other
payables
Weighted average
interest rate
Non-
interest
bearing
2012
Total
$
$
495
2,847,346
666,012
830,662
-
1,852,157
666,507
5,530,165
468,764
468,724
468,764
468,724
The following table details the Group’s exposure to interest rate risk as at 30 June 2011:
2011
Floating
Interest
Rate
$
Fixed
Interest
maturing
in 1 year
or less
$
Fixed
Interest
maturing
over 1 to 5
years
$
819,854
3,128,321
-
163,655
-
819,854
-
3,291,976
-
5.31%
-
-
-
-
Financial assets
Cash and cash
equivalents
Trade and other
receivables
Financial assets –
held for trading
Weighted average
Interest rate
Financial Liabilities
Trade and other
payables
Weighted average
interest rate
Non-
interest
bearing
2011
Total
$
$
495
3,948,670
1,215,134
1,378,789
3,961,462
5,177,091
3,961,462
9,288,921
934,274
934,274
934,274
934,274
46
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2012
18. FINANCIAL RISK MANAGEMENT (Cont’d)
Net Fair Values
The carrying value and net fair values of financial assets and liabilities at balance date
are:
2012
2011
Carrying
Amount
$
Net fair
Value
$
Carrying
Amount
$
Net fair
Value
$
On-balance sheet financial instruments
Financial assets
Cash and deposits
Receivables
Investment held for trading
Financial liabilities
Payables
2,847,346
830,662
1,852,157
5,530,165
468,764
468,764
2,847,346
830,662
1,852,157
5,530,165
468,764
468,764
3,948,670
1,378,789
3,961,462
9,288,921
3,948,670
1,378,789
3,961,462
9,288,921
934,274
934,274
934,274
934,274
The financial instruments recognised at fair value in the statement of financial position
have been analysed and classified using a fair value hierarchy reflecting the significance
of the inputs used in making the measurements. All financial instruments measured at fair
value are level one, meaning fair value is determined from quoted prices in active markets
for identical assets.
Sensitivity Analysis
Interest Rate Risk
The Company has performed sensitivity analysis relating to its exposure to interest rate risk at balance
date. This sensitivity analysis demonstrates the effect on the current year results and equity which could
result from a change in these risks.
Interest Rate Sensitivity Analysis
At 30 June 2012, the effect on loss as a result of changes in the interest rate, with all other variables
remaining constant would be as follows:
2012
$
2011
$
Change in loss
— Increase in interest rate by 100 basis points
— Decrease in interest rate by 100 basis points
28,474
39,487
(28,474)
(39,487)
Change in equity
— Increase in interest rate by 100 basis points
— Decrease in interest rate by 100 basis points
28,474
39,487
(28,474)
(39,487)
47
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2012
19.
EARNINGS PER SHARE
2012
$
2011
$
a) Reconciliation of earnings to profit or loss:
Profit/(loss)
Earnings used to calculate basic and diluted EPS
(1,875,229)
(1,875,229)
1,281,825
1,281,825
b) Reconciliation of earnings to profit or loss from continuing
operations:
Profit/(loss) from continuing operations
Earnings used to calculated basic and diluted EPS from
continuing operations
(1,875,229)
2,661,380
(1,875,229)
2,661,380
c) Reconciliation of earnings to profit of loss from discontinued
operations:
Profit/(loss) from discontinued operations
Earnings used to calculated basic and diluted EPS from
discontinued operations
-
-
(1,379,554)
(1,379,554)
d) Weighted average number of ordinary shares outstanding
during the period used in the calculation of basic EPS
122,402,825
112,950,184
No. of Shares
No. of Shares
Weighted average number of dilutive options outstanding
8,621
946,341
Weighted average number of ordinary shares outstanding
during the year used in calculating dilutive EPS
122,411,446
113,896,525
e) Diluted earnings per share is not reflected for discontinued
operations as the result is anti-dilutive in nature.
f) Anti-dilutive options on issue not used in dilutive EPS
calculation
-
-
-
-
48
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2012
20. CASH FLOW INFORMATION
(i)
Reconciliation of cash flows from operating
activities with profit/(loss) after income tax
Profit/(Loss) after income tax
Non-operating cash flows in loss for the year:
Depreciation
Finance costs on loans
Net Loss on sale of shares
Net Profit on sale of exploration assets
Net loss on disposal of controlled entity
Employee & Consultant equity settled
transactions
Fair value adjustment to investments
Exploration write-off
Management fees received
Changes in assets and liabilities:
Decrease/(increase) in trade receivables
and prepayments
Increase/(decrease) in trade payables,
accruals and employee entitlements
Increase/(decrease) in provisions
Decrease/(increase) in exploration
Decrease/(increase) in deferred tax assets
(Decrease)/increase in deferred tax
liabilities
2012
$
2011
$
(1,875,229)
1,281,825
68,379
-
57,274
(994,956)
-
30,527
996,190
1,411,634
(645)
44,537
530,410
80,846
(5,805,683)
1,379,554
188,011
(530,744)
185,195
(97,121)
101,525
(345,645)
(464,174)
-
(3,063,838)
(629,671)
57,818
10,230
(8,250,780)
289,514
413,094
1,211,791
Cash outflow from operations
(3,949,890)
(9,770,242)
(ii)
Non-cash financing and investing activities
Share based payments (note 28)
-
596,275
49
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2012
21.
COMMITMENTS
On 25 February 2010, the Group entered into a lease agreement with CB Richard Ellis (C)
Pty Ltd for the premises at Level 2, 38 Richardson Street, West Perth, Western Australia. The
initial term, is for three (3) years expiring on 1 April 2013 in consideration for a rental fee of
$216,804 per annum.
In order to maintain rights of tenure to mining tenements, the Group would have the
following discretionary exploration expenditure requirements up until expiry of leases.
These obligations, which are subject to renegotiation upon expiry of the leases, are not
provided for in the financial statements and are payable:
No longer than one year
Longer than one year, but not longer than five years
Longer than five years
2012
$
2,417,872
5,443,424
-
7,861,296
2011
$
703,623
3,232,591
-
3,936,214
At the moment the Group has commitments in excess of cash, however the Board
believes it will be able to raise the additional funds to satisfy the commitments for the
future.
If the Group decides to relinquish certain leases and/or does not meet these obligations,
assets recognised in the statement of financial position may require review to determine
the appropriateness of carrying values. The sale, transfer or farm-out of exploration rights
to third parties will reduce or extinguish these obligations.
22.
CONTROLLED ENTITIES
Parent Entity
Country of Incorporation Percentage Owned
2012
2011
Cazaly Resources Limited
Australia
Controlled Entities
Cazaly Iron Pty Ltd
Sammy Resources Pty Ltd
Cazroy Pty Ltd
Baker Fe Pty Ltd
Baldock Fe Pty Ltd
Lockett Fe Pty Ltd
Hase Fe Pty Ltd
Caz Yilgarn Pty Ltd
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
-
-
-
-
50
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2012
23. OPERATING SEGMENTS
The Group operates predominantly in one geographical segment, being Western Australia,
and in one business segment, mineral mining and exploration and substantially all of the
entity’s resources are deployed for this purpose.
Segment Information
Identification of reportable segments
The Group has identified its operating segments based on the internal reports that are
reviewed and used by the Board of Directors in assessing performance and determining
the allocation of resources.
The Group is managed primarily on the basis of its exploration and corporate activities.
Operating segments are therefore determined on the same basis.
Reportable segments disclosed are based on aggregating operating segments where the
segments are considered to have similar economic characteristics
Types of reportable segments
Exploration
Segment assets, including acquisition cost of exploration licenses, all expenses related to
the tenements and profit on sale of tenements are reported on in this segment.
Corporate
Corporate, including treasury, corporate and regulatory expenses arising from operating
an ASX listed entity. Segment assets, including cash and cash equivalents, and investments
in financial assets are reported in this segment.
Basis of accounting for purposes of reporting by operating segments
Accounting policies adopted
Unless stated otherwise, all amounts reported to the Board of Directors as the chief
decision maker with respect to operating segments are determined in accordance with
accounting policies that are consistent to those adopted in the annual financial
statements of the Company.
Segment assets
Where an asset is used across multiple segments, the asset is allocated to the segment
that receives the majority of economic value from the asset. In the majority of instances,
segment assets are clearly identifiable on the basis of their nature and physical location.
Unless indicated otherwise in the segment assets note, deferred tax assets and
intangible assets have not been allocated to operating segments.
Segment liabilities
Liabilities are allocated to segments where there is direct nexus between the incurrence
of the liability and the operations of the segment. Borrowings and tax liabilities are
generally considered to relate to the Group as a whole and are not allocated. Segment
liabilities include trade and other payables.
Unallocated items
The following items of revenue, expense, assets and liabilities are not allocated to
operating segments as they are not considered part of the core operations of any
segment:
• non-recurring items of revenue or expense;
•
• deferred tax assets and liabilities.
income tax expense;
51
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2012
23. OPERATING SEGMENTS (Cont’d)
(i) Segment performance
30 June 2012:
Total segment revenue
Reconciliation of segment revenue to total
revenue:
Inter-segment elimination
Unallocated revenue
Revenue from discontinued operations
Total group revenue
Exploration
$
Corporate
$
Total
$
2,285,095
183,972
2,469,067
-
-
-
2,469,067
Segment net profit/(loss) before tax
796,989
(869,491)
(72,502)
Reconciliation of segment result to group net
(loss) before tax:
Amounts not included in segment result but
reviewed by the Board:
Unallocated items:
Employee benefits
Occupancy costs
Consultants
Other
Net gain before tax from continuing operations
30 June 2011:
Total segment revenue
Reconciliation of segment revenue to total
revenue:
Inter-segment elimination
Unallocated revenue
Revenue from discontinued operations
Total group revenue
(439,833)
(292,304)
(302,063)
(985,105)
(2,091,807)
5,745,287
179,084
5,924,380
-
-
-
5,924,380
Segment net profit/(loss) before tax
4,908,206
(139,929)
4,768,277
Reconciliation of segment result to group net
(loss) before tax:
Amounts not included in segment result but
reviewed by the Board:
Unallocated items:
Employee benefits
Occupancy costs
Consultants
Other
Net gain before tax from continuing operations
(488,517)
(356,274)
(336,004)
(926,101)
2,661,381
52
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2012
23. OPERATING SEGMENTS (Cont’d)
Exploration
Corporate
Total
$
$
$
(ii) Segment assets
30 June 2012:
Segment assets
Segment asset increases for the period:
Capital expenditure
Acquisitions
Interest received
Capital raising
Reconciliation of segment assets to total assets:
Inter-segment eliminations
Unallocated assets:
Deferred tax assets
Other assets
Total assets from continuing operations
30 June 2011:
Segment assets
Segment asset increases for the period:
Capital expenditure
Acquisitions
Interest received
Capital raising
Reconciliation of segment assets to total assets:
Inter-segment eliminations
Unallocated assets:
Deferred tax assets
Other assets
Total assets from continuing operations
(iii) Segment liabilities
30 June 2012:
Segment liabilities
Reconciliation of segment liabilities to liabilities:
Inter-segment eliminations
Unallocated liabilities:
Deferred tax liabilities
Other liabilities
Total liabilities from continuing operations
19,072,479
5,731,753
24,804,232
3,027,119
36,719
-
-
-
3,027,119
668,068
183,972
425,000
704,787
183,972
425,000
3,063,838
1,277,040
4,340,878
-
5,274,863
-
30,079,095
17,477,364
9,427,311
26,904,675
9,269,114
-
9,269,114
49,000
49,000
179,093
179,093
2,829,284
2,829,284
-
-
9,269,114
3,057,377
12,326,491
-
-
-
4,645,192
-
31,549,867
-
-
5,755,748
551,196
6,306,944
53
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2012
23.
OPERATING SEGMENTS (Cont’d)
Exploration
Corporate
Total
30 June 2011:
Segment liabilities
Reconciliation of segment liabilities to liabilities:
$
-
$
-
Inter-segment eliminations
Unallocated liabilities:
Deferred tax liabilities
Other liabilities
Total liabilities from continuing operations
$
-
-
5,311,600
1.015,373
6,326,973
24. DISCONTINUED OPERATIONS
(a) On 17 June 2010, the Company announced that it had signed an agreement with Phoenix
Gold Pty Ltd (“Phoenix”) to sell its West Kalgoorlie Gold assets, including the 100% owned
subsidiary Hayes Mining Pty Ltd. The sale was conditional on Phoenix receiving approval
from the ASX for admission of its securities to the official list and obtaining ministerial
consents for tenement transfers to Phoenix.
Hayes Mining Pty Ltd was sold on 22 December 2010.
Financial information relating to the discontinued operation to the date of disposal is set
out below.
The financial performance of the discontinued operation to the date of sale which is
included in profit/ (loss) from discontinued operations per the statement of comprehensive
income is nil.
2012
$
2011
$
Net loss on disposal of Hayes Mining Pty Ltd
-
1,379,554
Loss on disposal of the subsidiary included in loss from discontinued operations per the
statement of comprehensive income.
The net cash flows of the discontinuing division which have been incorporated into the
cash flow statement are as follows:
Cash consideration for sale of Hayes Mining Pty
Ltd
-
1,380,000
(b) Discontinued Operations - Income Tax Expense of $1,379,554
The income tax expense recognised in the prior period is due to the deferred tax liability
that was building up within Hayes. The tax losses were transferred to Cazaly on sale, as
Cazaly did not have income to offset them against these losses the group derecognised
these assets and booked a tax loss.
54
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2012
25.
EVENTS SUBSEQUENT TO REPORTING DATE
On 22 August 2012 the Consolidated Group acquired 80% of the issued capital in Discovery
Minerals Pty Ltd (“Discovery”). Discovery, via its fully owned European subsidiary, has several
tenement applications in Europe targeting potential uranium mineralisation.
The purchase was satisfied by payments of $36,719 option fee and $200,000 for the 80% of the
issued capital. The financial effect of this transaction has not been brought into account in the
2012 financial statements.
26.
PARENT ENTITY DISCLOSURES
(a) Statement of financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Equity
Issued capital
Reserves:
Equity settled employee benefits
Retained profits
Total Equity
(b) Statement of comprehensive income
Total profit/ (loss)
Total comprehensive income
(c) Guarantees Entered into by the Parent Entity in
Relation to the Debts of its Subsidiaries
(d) Contingent Liabilities of the Parent Entity
(e) Commitments for the Acquisition of Property,
Plant and Equipment by the Parent Entity
Loans to Controlled Entities
2012
$
2011
$
3,345,207
7,092,567
5,073,936
9,075,259
10,437,774
14,149,195
551,197
140,115
1,015,370
550,829
691,312
1,566,199
23,711,848
23,145,288
861,938
(14,827,324)
1,210,019
(11,772,311)
9,746,462
12,582,996
(3,261,045)
5,432,207
(3,261,045)
5,432,207
-
-
-
-
-
-
Loans are provided by the Parent Entity to its controlled entities for their respective
operating activities. Amounts receivable from controlled entities are non-interest bearing
with no fixed term of repayment. The eventual recovery of the loan will be dependent
upon the successful commercial application of these projects or the sale to third parties.
55
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2012
27.
RELATED PARTY INFORMATION
Transactions between related parties are on commercial terms and conditions, no more
favourable than those available to other parties unless otherwise stated.
Transactions with related entities:
(i)
Director related Entities
Remuneration (excluding the reimbursement of costs) received or receivable by the
in
directors of the Group and aggregate amounts paid to superannuation plans
connection with the retirement of directors are disclosed
the
in Note 4
accounts.
to
Mr McMahon was at any time during the financial years ended 30 June 2012 and 30
June 2011, a director and shareholder of Hodges Resources Limited (“Hodges”), Winmar
Resources Limited (“Winmar”), Dempsey Minerals Limited (“Dempsey”) and Whinnen
Resources Limited (“Whinnen”). Hodges, Dempsey and Whinnen have an agreement
based on normal commercial terms and conditions to reimburse Cazaly for office rental
and administration and overheads. Winmar and Cazaly Iron Pty Ltd have entered into a
farm-in agreement whereby Winmar has the right to earn-in to an initial 51% interest in
the Hamersley Iron Ore project. Winmar paid a non-refundable option fee of $400,000
and $3.1million in cash and 2.5 million Winmar shares in consideration for the right to
earn-in under the agreement. Under the terms of the agreement the Cazaly group is
managing the exploration activities at the Hamersley Iron Ore project and re-coups all
exploration expenditure from Winmar plus a management fee.
Mr Jones was at any time during the financial years ended 30 June 2012 and 30 June
2011, a director and shareholder of Cortona Resources Limited (“Cortona”) Cortona had
an agreement based on normal commercial terms and conditions to reimburse Cazaly
for office rental and administration and overheads.
Aggregate amounts of each of the above types of other transaction with related parties
of Cazaly Resources Limited:
Sales
Rent, administrative and office overheads:
• Hodges Resources Limited
• Dempsey Minerals Limited
• Cortona Resources Limited
• Whinnen Resources Limited
Consideration received from Winmar Resources Limited
under farm-in agreement
• Cash consideration and option fees
• Value of equity securities received
On-charge of exploration under joint venture
arrangements:
• Winmar Resources Limited
2012
$
2011
$
119,719
80,767
-
18,223
81,781
-
11,349
47,098
- 3,500,000
-
500,000
- 4,000,000
387,237 2,218,324
56
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2012
28.
SHARE BASED PAYMENTS
Options are issued to vendors as part of purchase consideration and also to directors and
employees as part of their remuneration as disclosed in Note 4. The options issued may be
subject to performance criteria, and are issued to directors and employees of Cazaly
Resources Limited to increase goal congruence between executives, directors and
shareholders.
On 29 September 2010, the Company announced that it had entered into a bridging
facility with a range of Institutions, Sophisticated Investors and Directors to provide a loan
amount of a minimum of A$2 million and maximum of A$4 million. Kingsreef Pty Ltd
provided $700,000 and Widerange Corporation Limited provided $100,000 to the
Company by way of short-term finance under the facility. Kingsreef Pty Ltd is an entity
controlled by Mr Nathan McMahon and Widerange Corporation Pty Ltd is an entity
controlled by Mr Clive Jones, both of whom are Directors and therefore are related parties
of the Company. The finance provided by Messers McMahon and Jones was based on
the same arm’s length terms as the other lenders.
The bridging facility was arranged as a short-term finance for the purpose of allowing for
completion of the Parker Range Bankable Feasibility Study, Parker Range environmental,
mining and other permitting activities and for general working capital requirements. The
Company has drawn down A$2,550,000 under the facility.
In accordance with the terms of the bridging facility, the Company issued 2,550,000
Options exercisable at 53 cents, expiring 18 October 2012. The Options were issued on the
basis of 100,000 Options for every $100,000 drawn down.
The following table illustrates the number and weighted average exercise prices of and
movements in share options issued under Share Based Payment Scheme during the year:
2012
2011
Number of
Options
Weighted
Average
Exercise
Price
$
Number of
Options
Weighted
Average
Exercise
Price
$
9,775,000
0.43
6,475,000
0.35
350,000
-
(1,500,000)
(4,550,000)
5,075,000
0.31
-
0.28
0.42
0.47
4,300,000
-
(1,000,000)
-
9,775,000
0.53
-
0.30
-
0.44
5,075,000
9,775,000
At beginning of reporting
period
Granted during the period
Employee & consultants
options
Director remuneration
Exercised during the period
Expired during the period
Balance the end of
reporting period
Exercisable at end of
reporting period
(i)
(ii)
(iii)
The compensation options outstanding at 30 June 2012 had a weighted average exercise
price between $0.28 and $0.53 and a weighted average remaining life between 3 months
and 2 ½ years.
The respective weighted average fair values of options granted during 2012 were $0.0872.
Included under employee benefits expense and consultancy expenses in the Statement of
Comprehensive Income is $30,527 (2011: $156,549), and relates to equity-settled payment
transactions.
57
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2012
28.
SHARE BASED PAYMENTS (Cont’d)
The following share-based payment arrangements were in existence during the current and prior
reporting periods:
Options series
Number
Grant date
Expiry date
Bridging Facility
Bridging Facility
Bridging Facility
Employees & Consultants
Employees & Consultants
Consultant
Consultant
Consultant
Employee
1,600,000 18/10/2010
4/11/2010
100,000
850,000
6/12/2010
250,000 14/12/2010
300,000 18/3/2011
200,000 15/4/2011
1,000,000 15/4/2011
100,000 14/9/2011
250,000 15/12/2011
18/10/2012
18/10/2012
18/10/2012
18/10/2012
18/3/2014
18/3/2014
30/6/2012
14/9/2013
15/12/2013
Exercise
price
$0.53
$0.53
$0.53
$0.53
$0.52
$0.52
$0.55
$0.40
$0.28
Fair value at
grant date
$0.1755
$0.1435
$0.1331
$0.1258
$0.1345
$0.1641
$0.0834
$0.1140
$0.0765
The following share options were exercised during the year:
Option series
Number exercised
Exercise date
Granted 13 November 2009
Granted 13 November 2009
1,000,000
500,000
1,500,000
5/7/2011
11/10/2011
Share price at exercise
date
$0.345
$0.285
The fair value of the options granted is determined by using the Black-Scholes methodology. The
following table lists the inputs to the models used for period ended 30 June 2012:
Allottees
Consultant
Employee
Fair Value
at Grant
Date
$0.1140
$0.0765
Estimated
Volatility
73%
73%
Life of
Option
(yrs)
2.00
2.00
Exercise
Price
Share
Price
Risk Free
Interest
Rate
$0.40
$0.0.28
$0.32
$0.22
4.75%
4.25%
The expected volatility is based on the historical volatility (based on remaining life of the
options), adjusted for any expected changes to future volatility based on publicly available
information.
29.
CONTINGENT LIABILITIES AND CONTINGENT ASSETS
There are currently no other contingent liabilities or contingent assets outstanding at the
end of the year.
58
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2012
30.
NEW ACCOUNTING STANDARDS FOR APPLICATION IN FUTURE YEARS
The AASB has issued new and amended Accounting Standards and Interpretations that
have mandatory application dates for future reporting Years and which the consolidated
entity has decided not to early adopt. A discussion of those future requirements and their
impact on the Company is as follows:
AASB
Reference
Title and Description
AASB 2011-9 Amendments
Standards
Comprehensive Income [AASB 101]
–
to
Australian
Presentation
Effective date
(i.e. annual
reporting
periods
ending on or
after)
30 June 2013
Accounting
Other
of
This standard requires entities to group items
presented in other comprehensive income on
they are potentially
the basis of whether
classifiable
subsequently
(reclassification adjustments).
to profit or
loss
Likely impact
on
in
Impacts
separating
components
other
comprehensive
income
between
reclassification
and
reclassification
adjustments
non-
AASB 2011-4 Amendments
to
Australian
Standards
Management Personnel
to
Remove
Accounting
Key
Individual
Disclosure Requirements [AASB 124]
This standard makes amendments to remove
individual key management personnel disclosure
requirements from AASB 124.
30 June 2014
This will result in
the removal of
various
key
management
personnel
disclosures
relating
disclosing
entities
the
report.
within
financial
to
59
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2012
30.
NEW ACCOUNTING STANDARDS FOR APPLICATION IN FUTURE YEARS (Cont’d)
31 December
2013
AASB 9
Financial instruments
AASB 9 includes requirements for the classification
and measurement of financial assets. It was further
amended by AASB 2010-7 to reflect amendments
to the accounting for financial liabilities.
requirements
These
improve and simplify the
approach for classification and measurement of
financial assets compared with the requirements
of AASB 139. The main changes are described
below.
(a) Financial assets that are debt instruments will
be classified based on (1) the objective of the
entity’s business model for managing the
financial assets; (2) the characteristics of the
contractual cash flows.
(b) Allows an
for trading
irrevocable election on
initial
recognition to present gains and losses on
investments in equity instruments that are not
in other comprehensive
held
income. Dividends
these
respect of
in
investments that are a return on investment
can be recognised in profit or loss and there is
no impairment or recycling on disposal of the
instrument.
(c) Financial assets can be designated and
measured at fair value through profit or loss at
initial recognition if doing so eliminates or
reduces a measurement or
significantly
inconsistency that would arise
recognition
from measuring assets or
liabilities, or
recognising the gains and losses on them, on
different bases.
(d) Where the fair value option is used for financial
liabilities the change in fair value is to be
accounted for as follows:
-
-
The change attributable to changes in
credit
in other
risk are presented
comprehensive income (OCI)
The remaining change is presented in
profit or loss
If
this approach creates or enlarges an
accounting mismatch in the profit or loss, the
effect of the changes in credit risk are also
presented in profit or loss.
Consequential amendments were also made to
other standards as a result of AASB 9, introduced
by AASB 2009-11
Depending on
assets held, there
may be
significant
movement of
assets between
fair value and
cost categories
and ceasing of
impairment
testing on
available for sale
assets.
If the entity holds
any ‘own credit
risk’ financial
liabilities, the fair
value gain or loss
will be
incorporated in
the OCI, rather
than profit or loss,
unless
accounting
mismatch.
60
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2012
30.
NEW ACCOUNTING STANDARDS FOR APPLICATION IN FUTURE YEARS (Cont’d)
31 December
2013
Entities most likely
to be impacted
are those that:
AASB 10
Consolidated Financial Statements
AASB 10 establishes a new control model that
applies to all entities. It replaces parts of AASB 127
Consolidated and Separate Financial Statements
dealing with the accounting for consolidated
financial statements and UIG-112 Consolidation –
Special Purpose Entities.
The new control model broadens the situations
when an entity is considered to be controlled by
another entity and includes new guidance for
applying the model to specific situations, including
when acting as a manager may give control, the
impact of potential voting
rights and when
holding less than a majority voting rights may give
control. This is likely to lead to more entities being
consolidated into the group.
Consequential amendments were also made to
other standards via AASB 2011-7 and amendments
to AASB 127.
AASB 11
Joint Arrangements
(JCEs)
entities
controlled
joint control exists may change.
AASB 11 replaces AASB 131 Interests in Joint
Ventures and UIG- 113 Jointly- controlled Entities –
Non-monetary Contributions by Ventures. AASB 11
uses the principle of control in AASB 10 to define
joint control, and therefore the determination of
whether
In
addition it removes the option to account for
jointly
using
proportionate consolidation. Instead, accounting
for a joint arrangement is dependent on the
nature of the rights and obligations arising from
the arrangement. Joint operations that give the
venturers a right to the underlying assets and
obligations
for by
recognising
those assets and
obligations. Joint ventures that give the venturers
a right to the net assets is accounted for using the
equity method. This may result in a change in the
accounting for the joint arrangements held by the
group.
themselves
the
is accounted
share of
31 December
2013
Consequential amendments were also made to
other standards via AASB 2011-7 and amendments
to AASB128.
AASB 12
Disclosure of Interests in Other Entities
AASB 12 includes all disclosures relating to an
entity’s interests in subsidiaries, joint arrangements,
associates and structures entities. New disclosures
have been introduced about the judgements
made by management to determine whether
summarised
to
control exists, and
information about joint arrangements, associates
and structured entities and subsidiaries with non-
controlling interests.
require
31 December
2013
-
-
have
significant,
but not a
majority
equity
interests in
other entities;
hold
potential
voting rights
over
investments ,
such as
options or
convertible
debt.
For entities, that
have joint
ventures that
have been
previously
accounted using
proportionate
consolidation,
they will need to
change to equity
accounting.
There are some
additional
enhanced
disclosures
centred around
significant
judgements and
assumptions
made around
determining
control, joint
control and
significant
influence.
61
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2012
30.
NEW ACCOUNTING STANDARDS FOR APPLICATION IN FUTURE YEARS (Cont’d)
AASB 13
Fair Value Measurement
AASB 13 establishes a single source of guidance
under AASB for determining the fair value of assets
and liabilities. AASB 13 does not change when an
entity is required to use fair value, but rather,
provides guidance on how to determine fair value
when
required or permitted.
Application of this definition may result in different
fair values being determined for the relevant
assets.
fair value
is
AASB 13 also expands the disclosure requirements
for all assets or liabilities carried at fair value. This
includes information about the assumptions made
and the qualitative impact of those assumptions
on the fair value determined.
Consequential amendments were also made to
other standards via AASB 2011-8.
AASB 119
Employee Benefits
the options
The main change introduced by this standard is to
revise the accounting for defined benefit plans.
The amendment
for
removes
accounting for the liability, and requires that the
liabilities arising from such plans is recognized in
losses being
full with actuarial gains and
recognized in other comprehensive income. It
also revised the method of calculating the return
on plan assets. The definition of short-term benefits
has been revised, meaning some annual leave
entitlements may become long-term in nature
with a revised measurement. Similarly the timing
for recognising a provision for termination benefits
has been revised, such that provisions can only be
recognised when the offer cannot be withdrawn.
Consequential amendments were also made to
other standards via AASB 2011-10.
31 December
2013
31 December
2013
For financial
assets, AASB 13's
guidance is
broadly
consistent with
existing practice.
It will however
also apply to the
measurement of
fair value for non-
financial assets
and will make a
significant
change
toexisting
guidance in the
applicable
standards.
Only impacts
entity’s which
have any
defined benefit
plans, and the
removal of the
deferral of gains
and losses under
the corridor
approach.
Interpretatio
n 20
Stripping Costs in the Production Phase of a
Surface Mine
1 January 2013
to
interpretation applies
This
stripping costs
incurred during the production phase of a surface
mine. Production stripping costs are
to be
capitalised as part of an asset, if an entity can
demonstrate that it is probable future economic
benefits will be realised, the costs can be reliably
measured and
the
component of an ore body for which access has
been improved. This asset is to be called the
“stripping activity asset”.
the entity can
identify
systematic basis, over
The stripping activity asset shall be depreciated or
amortised on a
the
expected useful life of the identified component
of the ore body that becomes more accessible as
a result of the stripping activity. The units of
production method
shall be applied unless
another method is more appropriate.
62
DIRECTORS’ DECLARATION
Cazaly Resources Limited Annual Report 2011
In accordance with a resolution of the directors of Cazaly Resources Limited, the directors of the
company declare that:
1.
the financial statements and notes, as set out on pages 22 to 62, are in accordance with
the Corporations Act 2001 and:
a.
b.
comply with Australian Accounting Standards, which, as stated in accounting
financial statements, constitutes compliance with
policy Note 1 to the
International Financial Reporting Standards (IFRS); and
give a true and fair view of the financial position as at 30 June 2012 and of the
performance for the year ended on that date of the consolidated group;
2.
3.
in the directors’ opinion there are reasonable grounds to believe that the company will
be able to pay its debts as and when they become due and payable; and
the directors have been given the declarations required by s 295A of the Corporations
Act 2001 from the Chief Executive Officer and Chief Financial Officer.
On behalf of the Directors
Nathan McMahon
Managing Director
Perth,
28 September 2012
63
We have audited the accompanying financial report of Cazaly Resources Limited (“the
Company”) and Controlled Entities (“the Consolidated Entity”), which comprises the
consolidated statement of financial position as at 30 June 2012, and the consolidated
statement of comprehensive income, consolidated statement of changes in equity and
consolidated statement of cash flows for the year then ended, notes comprising a summary
of significant accounting policies and other explanatory information, and the directors’
declaration of the Consolidated Entity, comprising the Company and the entities it
controlled at the year’s end or from time to time during the financial year.
The directors of the Company are responsible for the preparation and fair presentation of
the financial report in accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal control as the directors determine is necessary
to enable the preparation of the financial report that is free from material misstatement,
whether due to fraud or error. In Note 1, the directors also state, in accordance with
Accounting Standards AASB 101: Presentation of Financial Statements, that the financial
statements comply with International Financial Reporting Standards.
Our responsibility is to express an opinion on the financial report based on our audit. We
conducted our audit in accordance with Australian Auditing Standards. These Auditing
Standards require that we comply with relevant ethical requirements relating to audit
engagements and plan and perform the audit to obtain reasonable assurance whether the
financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material misstatement of the financial
report, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the
financial report in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by the
directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion.
In conducting our audit, we followed applicable independence requirements of Australian professional ethical
pronouncements and the Corporations Act 2001.
In our opinion:
a. The financial report of Cazaly Resources Limited and Controlled Entities is in accordance with the
Corporations Act 2001, including:
i.
giving a true and fair view of the Company and Consolidated Entity’s financial position as at 30 June
2012 and of its performance for the year ended on that date; and
ii.
complying with Australian Accounting Standards and the Corporations Regulations 2001;
b. The financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
We have audited the Remuneration Report included in directors’ report of the year ended 30 June 2012. The
directors of the Company are responsible for the preparation and presentation of the Remuneration Report in
accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
In our opinion, the Remuneration Report of Cazaly Resources Limited for the year ended 30 June 2012,
complies with section 300A of the Corporations Act 2001.
BENTLEYS
Chartered Accountants
CHRIS WATTS CA
Director
DATED at PERTH this 28th day of September 2012
ADDITIONAL SHAREHOLDER INFORMATION
_______________________________________________________________________________________________________________
Cazaly Resources Limited Annual Report 2011
Shareholding
The distribution of members and their holdings of equity securities in the company as at 19
September 2012 were as follows:
Class of Equity Securities
Number Held as at 19 September Fully Paid Ordinary Shares
1-1,000
1,001 - 5,000
5,001 – 10,000
10,001 - 100,000
100,001 and over
TOTALS
308
883
515
872
183
2,761
Substantial Shareholders
Substantial shareholders in the Company are set out below
Shareholder
Nathan McMahon
Clive Jones
Unquoted Securities
Class of Equity
Security
18 October 2012
26 October 2012
22 May 2013
6 July 2013
14 September 2013
15 December 2013
18 March 2014
11 January 2015
4 February 2015
Exercise Price
Number
Under
Option
2,800,000
225,000
100,000
750,000
100,000
250,000
500,000
925,000
100,000
$0.53
$0.45
$0.30
$0.30
$0.40
$0.28
$0.52
$0.33
$0.49
Number
15,828,560
7,566,802
Number of Security
Holders
15
2
1
1
1
1
3
5
1
66
ADDITIONAL SHAREHOLDER INFORMATION
_______________________________________________________________________________________________________________
Cazaly Resources Limited Annual Report 2011
Voting Rights
The voting rights attached to each class of equity security are as follows:
Ordinary Shares
Each ordinary share is entitled to one vote when a poll is called, otherwise each
-
- member present at a meeting or by proxy has one vote on a show of hands.
Quoted and Unquoted Options
-
These options have no voting rights.
Twenty Largest Shareholders
The names of the twenty largest ordinary fully paid shareholders as at 19 September 2012
are as follows:
Name
Kingsreef Pty Ltd
New Page Investments Limited
Clive Bruce Jones
Nathan McMahon
Clive Jones
GGDT Developments Pty Ltd
Debra McMahon
HSBC Custody Nominees (Australia)
Limited
Peter Anastasiou & Kristine
Anastasiou
Kent Michael Hunter
Citicorp Nominees Pty Limited
Appolinax Inc
Fusion Resources Pty Ltd
UBS Wealth Management Australia
Nominees Pty Ltd
Texas Woods Pty ltd
JP Morgan Nominees Australia
Limited
Kouta Bay Pty Ltd
Halcyon One Pty Ltd
Fifty-Fifth Leprechaun Pty Ltd
Anthony Ramage
Number of Ordinary
Fully Paid Shares Held
10,994,363
8,000,000
6,135,004
4,455,005
2,500,001
2,500,000
1,552,595
1,535,781
1,509,770
1,311,352
1,077,500
1,000,000
1,000,000
920,975
744,000
709,197
703,250
700,000
676,000
650,000
% Held of Issued
Ordinary Capital
8.968
6.526
5.005
3.634
2.039
2.039
1.267
1.253
1.232
1.070
0.879
0.816
0.816
0.751
0.607
0.579
0.574
0.571
0.551
0.530
TOTAL
49,674,793
40.521
67
CORPORATE GOVERNANCE STATEMENT Cazaly Resources Limited Annual Report 2011
_______________________________________________________________________________________________________________
CORPORATE GOVERNANCE
The Company is committed to implementing the highest standards of corporate governance. In
determining what those high standards should involve the Company has turned to the ASX Corporate
Governance Council’s Corporate Governance Principles and Recommendations, 2nd Edition. The
Company is pleased to advise that the Company’s practices are largely consistent with those ASX
guidelines. As consistency with the guidelines has been a gradual process, where the Company did not
have certain policies or committees recommended by the ASX Corporate Governance Council (the
Council) in place during the reporting period, we have identified such policies or committees.
The Board of Directors of Cazaly Resources Limited is responsible for corporate governance of the
Company. The Board guides and monitors the business and affairs of Cazaly Resources Limited on
behalf of the shareholders by whom they are elected and to whom they are accountable.
Where the Company’s corporate governance practices do not correlate with the practices
recommended by the Council, the Company is working towards compliance however it does not
consider that all the practices are appropriate for the Company due to the size and scale of Company
operations.
For further information on corporate governance policies adopted by Cazaly Resources Limited, refer
to our website: www.cazalyresources.com.au.
The Company reports below on how it has followed (or otherwise departed from) each of the Principles
& Recommendations during the 2011/2012 financial year (Reporting Period).
Board
Roles and responsibilities of the Board and Senior Executives
(Recommendations: 1.1, 1.3)
The Company has established the functions reserved to the Board, and those delegated to senior
executives and has set out these functions in its Board Charter.
The Board is collectively responsible for promoting the success of the Company through its key functions
of overseeing the management of the Company, providing overall corporate governance of the
the Company, engaging appropriate
Company, monitoring
management commensurate with the Company's structure and objectives, involvement in the
development of corporate strategy and performance objectives, and reviewing, ratifying and
monitoring systems of risk management and internal control, codes of conduct and legal compliance.
financial performance of
the
Senior executives are responsible for supporting the two Managing Directors and assisting the
Managing Directors in implementing the running of the general operations and financial business of the
Company in accordance with the delegated authority of the Board. Senior executives are responsible
for reporting all matters which fall within the Company's materiality thresholds at first instance to the
Managing Directors or, if the matter concerns one of the Managing Director, directly to other
Managing Director or the lead independent director, as appropriate.
The Company's Board Charter is available on the Company's website.
Skills, experience, expertise and period of office of each Director
(Recommendation: 2.6)
A profile of each Director setting out their skills, experience, expertise and period of office is set out in
the Directors' Report.
68
CORPORATE GOVERNANCE STATEMENT Cazaly Resources Limited Annual Report 2011
_______________________________________________________________________________________________________________
Director independence
(Recommendations: 2.1, 2.2, 2.3, 2.6)
The Board does not have a majority of Directors who are independent.
Mr Hunter is a Non-Executive Director and is considered to be Independent. Mr Hunter is independent
as he is a non-executive director who is not a member of management and is free of any business or
other relationship that could materially interfere with, or could reasonably be perceived to materially
interfere with, the independent exercise of his judgement. The Board considers the independence of
directors having regard to the relationships listed in Box 2.1 of the Principles & Recommendations and
the Company's materiality thresholds.
Mr McMahon is an Executive Director of the Company and does not meet the Company’s criteria
for independence. Mr McMahon’s experience and knowledge of the Company make his
contribution to the Board such that it is appropriate for him to remain on the Board.
Mr Jones is an Executive Director of the Company and does not meet the Company’s criteria for
independence. Mr Jones experience and knowledge of the Company make his contribution to
the Board such that it is appropriate for him to remain on the Board.
Given the size of the company and the industry in which it operates, the current Board structure is
considered to best serve the Company in meeting its objectives, given its small capitalisation,
limited resources and existing operations. The composition of the Board is reviewed on an annual
basis to ensure that the Board has the appropriate mix of expertise and experience.
The Board has agreed on the following guidelines, as set out in the Company's Board Charter, for
assessing the materiality of matters:
•
•
•
•
Balance sheet items are material if they have a value of more than 10% of pro-forma net asset.
Profit and loss items are material if they will have an impact on the current year operating result of
10% or more.
Items are also material if they impact on the reputation of the Company, involve a breach of
legislation, are outside the ordinary course of business, could affect the Company’s rights to its
assets, if accumulated would trigger the quantitative tests, involve a contingent liability that would
have a probable effect of 10% or more on balance sheet or profit and loss items, or will have an
effect on operations which is likely to result in an increase or decrease in net income or dividend
distribution of more than 10%.
Contracts will be considered material if they are outside the ordinary course of business, contain
exceptionally onerous provisions in the opinion of the Board, impact on income or distribution in
excess of the quantitative tests, there is a likelihood that either party will default and the default
may trigger any of the quantitative or qualitative tests, are essential to the activities of the
Company and cannot be replaced or cannot be replaced without an increase in cost which
triggers any of the quantitative tests, contain or trigger change of control provisions, are between
or for the benefit of related parties, or otherwise trigger the quantitative tests.
Independent professional advice
(Recommendation: 2.6)
To assist directors with independent judgement, it is the Board's policy that if a director considers it
necessary to obtain independent professional advice to properly discharge the responsibility of their
office as a director then, provided the director first obtains approval from the Chair for incurring such
expense, the Company will pay the reasonable expenses associated with obtaining such advice.
Selection and (Re)appointment of Directors
(Recommendation: 2.6)
In determining candidates for the Board, the Nomination Committee (or equivalent) follows a
prescribed process whereby it evaluates the mix of skills, experience and expertise of the existing Board.
In particular, the Nomination Committee (or equivalent) is to identify the particular skills that will best
increase the Board's effectiveness. Consideration is also given to the balance of independent directors.
Potential candidates are identified and, if relevant, the Nomination Committee (or equivalent)
recommends an appropriate candidate for appointment to the Board. Any appointment made by the
Board is subject to ratification by shareholders at the next general meeting.
69
CORPORATE GOVERNANCE STATEMENT Cazaly Resources Limited Annual Report 2011
_______________________________________________________________________________________________________________
The Board recognises that Board renewal is critical to performance and the impact of Board tenure on
succession planning. Each director other than the Managing Director, must not hold office (without re-
election) past the third annual general meeting of the Company following the director's appointment
or three years following that director's last election or appointment (whichever is the longer). However,
a director appointed to fill a casual vacancy or as an addition to the Board must not hold office
(without re-election) past the next annual general meeting of the Company. At each annual general
meeting a minimum of one director or one third of the total number of directors must resign. A director
who retires at an annual general meeting is eligible for re-election at that meeting and re-appointment
of directors is not automatic.
Board committees
Nomination Committee
(Recommendations: 2.4, 2.6)
The Board has not established a separate Nomination Committee. Given the current size and
composition of the Board, the Board believes that there would be no efficiencies gained by establishing
a separate Nomination Committee. Accordingly, the Board performs the role of the Nomination
Committee. Items that are usually required to be discussed by a nomination committee are marked as
separate agenda items at Board meetings when required. When the Board convenes as the
Nomination Committee it carries out those functions which are delegated to it in the Company’s
Nomination Committee Charter. The Board deals with any conflicts of interest that may occur when
convening in the capacity of the Nomination Committee by ensuring that the director with conflicting
interests is not party to the relevant discussions.
To assist the Board to fulfil its function as the Nomination Committee, it has adopted a Nomination
Committee Charter which describes the role, composition, functions and responsibilities of the
Nomination Committee.
Audit Committee
(Recommendations: 4.1, 4.2, 4.3, 4.4)
The Board has not established a separate Audit Committee, and therefore it is not structured in
accordance with Recommendation 4.2. Given the current size and composition of the Board, the
Board believes that there would be no efficiencies gained by establishing a separate Audit Committee.
Accordingly, the Board performs the role of Audit Committee. Items that are usually required to be
discussed by an Audit Committee are marked as separate agenda items at Board meetings when
required. When the Board convenes as the Audit Committee it carries out those functions which are
delegated to it in the Company’s Audit Committee Charter. The Board deals with any conflicts of
interest that may occur when convening in the capacity of the Audit Committee by ensuring that the
director with conflicting interests is not party to the relevant discussions.
The full Board, in its capacity as the Audit Committee, held one meeting during the Reporting Period. To
assist the Board to fulfil its function as the Audit Committee, the Company has adopted an Audit
Committee Charter which describes the role, composition, functions and responsibilities of the Audit
Committee.
All of the directors consider themselves to be financially literate and possess relevant industry
experience. Details of each of the director's qualifications are set out in the Directors' Report.
The Company has established procedures for the selection, appointment and rotation of its external
auditor. The Board is responsible for the initial appointment of the external auditor and the
appointment of a new external auditor when any vacancy arises, as recommended by the Audit
Committee (or its equivalent). Candidates for the position of external auditor must demonstrate
complete independence from the Company through the engagement period. The Board may
otherwise select an external auditor based on criteria relevant to the Company's business and
circumstances. The performance of the external auditor is reviewed on an annual basis by the Audit
Committee (or its equivalent) and any recommendations are made to the Board.
Remuneration Committee
(Recommendations: 8.1, 8.2, 8.3)
The Board has not established a separate Remuneration Committee. Given the current size and
composition of the Company, the Board believes that there would be no efficiencies gained by
establishing a separate Remuneration Committee. Accordingly, the Board performs the role of
70
CORPORATE GOVERNANCE STATEMENT Cazaly Resources Limited Annual Report 2011
_______________________________________________________________________________________________________________
Remuneration Committee. Items that are usually required to be discussed by a Remuneration
Committee are marked as separate agenda items at Board meetings when required. When the Board
convenes as the Remuneration Committee it carries out those functions which are delegated to it in the
Company’s Remuneration Committee Charter. The Board deals with any conflicts of interest that may
occur when convening in the capacity of the Remuneration Committee by ensuring that the director
with conflicting interests is not party to the relevant discussions.
To assist the Board to fulfil its function as the Remuneration Committee, it has adopted a Remuneration
Committee Charter which describes the role, composition, functions and responsibilities of the
Remuneration Committee.
Details of remuneration, including the Company’s policy on remuneration, are contained in the
“Remuneration Report” which forms of part of the Directors’ Report. The remuneration of non-executive
directors is set by reference to payments made by other companies of similar size and industry, and by
reference to the director’s skills and experience. Given the Company is at its early stage of
development and the financial restrictions placed on it, the Company may consider it appropriate to
issue unlisted options to non-executive directors, subject to obtaining the relevant approvals. The
Remuneration Policy is subject to annual review. All of the directors’ option holdings are fully disclosed.
Executive Pay and rewards consists of a base salary and performance incentives. Long term
performance incentives may include options granted at the discretion of the Board and subject to
obtaining the relevant approvals. The grant of options is designed to recognise and reward efforts as
well as to provide additional incentive and may be subject to the successful completion of
performance hurdles. Executives are offered a competitive level of base pay at market rates (for
comparable companies) and are reviewed annually to ensure market competitiveness. Executives are
prohibited from entering into transactions or arrangements which limit the economic risk of
participating in unvested entitlements.
Performance evaluation
Senior executives
(Recommendations: 1.2, 1.3)
The Managing Directors are responsible for evaluating the performance of senior executives. The
evaluation of senior executives is undertaken via an informal interview process which occurs annually or
more frequently as required and otherwise takes place as part of the annual salary review under the
senior executives’ employment contract.
During the Reporting Period an evaluation of senior executives took place in accordance with the
process disclosed above.
Board, its committees and individual directors
(Recommendations: 2.5, 2.6)
The Chair is responsible for evaluating the performance of the Board and, when appropriate, Board
committees and individual directors deemed. The Board is responsible for evaluating the Managing
Directors. The evaluations of the Board, and any applicable Board committees and individual directors
are undertaken via informal discussions on an on-going basis with the Chair.
The evaluation of the Managing Directors is undertaken via an informal interview process which occurs
annually or more frequently, at the Board’s discretion.
Ethical and responsible decision making
Code of Conduct
(Recommendations: 3.1, 3.3)
The Company has established a Code of Conduct as to the practices necessary to maintain
confidence in the Company's integrity, the practices necessary to take into account its legal
obligations and the
responsibility and
accountability of individuals for reporting and investigating reports of unethical practices.
reasonable expectations of
its stakeholders, and the
Diversity Policy
(Recommendations: 3.2, 3.3, 3.4 & 3.5)
Diversity includes, but is not limited to, gender, age, ethnicity and cultural background. The company is
committed to diversity and recognises the benefits arising from employee and board diversity and the
71
CORPORATE GOVERNANCE STATEMENT Cazaly Resources Limited Annual Report 2011
_______________________________________________________________________________________________________________
importance of benefiting from all available talent. The Company has established a Diversity Policy,
which includes requirements for the Board to establish measurable objectives for achieving gender
diversity and for the Board to assess annually both the objectives and progress in achieving them.
During the Reporting Period the Company developed and the Board adopted a Diversity Strategy
which details the Company’s measurable objectives for achieving gender diversity in accordance with
the Diversity Policy. In doing this, and assigning the responsibility for the Diversity Policy and its
administration, monitoring and review, the Company has achieved its structural and procedural
measurable objectives set for [2011/12]. The Diversity Strategy includes a number of concepts including
contribution to enhance local workforce and provision of opportunities for career development.
Initiation of programs and schemes to achieve these goals were achieved during the Reporting Period.
The Board has also adopted a policy to address harassment and discrimination in the Company, which
it believes will facilitate an environment that encourages a diverse workforce.
A summary of the Company’s Diversity Policy is available on the Company’s website.
The proportions of, women in senior executive positions and women on Board as at 30 June 2012 are set
out below:
Women on the Board
Women in senior management roles
Continuous Disclosure
(Recommendations: 5.1, 5.2)
2012
No.
0
1
%
0
25
The Company has established written policies and procedures designed to ensure compliance with ASX
Listing Rule disclosure requirements and accountability at a senior executive level for that compliance.
A summary of the Company's Policy on Continuous Disclosure is available on the Company's website.
Shareholder Communication
(Recommendations: 6.1, 6.2)
The Company has designed a communications policy for promoting effective communication with
shareholders and encouraging shareholder participation at general meetings.
A copy of the Company's Shareholder Communication Policy is available on the Company's website.
Risk Management
Recommendations: 7.1, 7.2, 7.3, 7.4)
The Board has adopted a Risk Management Policy, which sets out the Company's risk profile. Under the
policy, the Board is responsible for approving the Company's policies on risk oversight and
management and satisfying itself that management has developed and implemented a sound system
of risk management and internal control.
Under the policy, the Board delegates day-to-day management of risk to the Managing Directors, who
are responsible for identifying, assessing, monitoring and managing risks. The Managing Directors are
also responsible for updating the Company's material business risks to reflect any material changes, with
the approval of the Board.
In fulfilling the duties of risk management, the Managing Directors may have unrestricted access to
Company employees, contractors and records and may obtain independent expert advice on any
matter they believe appropriate, with the prior approval of the Board.
In addition, the following risk management measures have been adopted by the Board to manage the
Company's material business risks:
•
•
the Board has established authority limits for management, which, if proposed to be
exceeded, requires prior Board approval;
the Board has adopted a compliance procedure for the purpose of ensuring compliance with
the Company's continuous disclosure obligations; and
72
CORPORATE GOVERNANCE STATEMENT Cazaly Resources Limited Annual Report 2011
_______________________________________________________________________________________________________________
the Board has adopted a corporate governance manual which contains other policies to
assist the Company to establish and maintain its governance practices.
•
During the Reporting Period, management regularly reported to the Board on the following categories
of risks affecting the Company as part of the Company’s systems and processes for managing material
business risks: operational, financial reporting, sovereignty and market-related risks.
The Managing Director and the Chief Financial Officer have provided a declaration to the Board in
accordance with section 295A of the Corporations Act and have assured the Board that such
declaration is founded on a sound system of risk management and internal control and that the system
is operating effectively in all material respects in relation to financial reporting risks.
A summary of the Company's Risk Management Policy is available on the Company's website.
73
Cazaly Resources Limited Annual Report 2011
_______________________________________________________________________________________________________________
SCHEDULE OF MINERAL TENEMENTS AS AT 28 AUGUST 2012
TENEMENTS
PROJECT NAME
TENEMENT
S
PROJECT NAME
2 ELA's
1 ELA
19 PL's
6 EL's, 1 ELA, 3 PL's, 1 ML
3 EL's, 1 PL
5 EL's
5 EL's
1 EL
10 PL's
2 EL's
1 ELA
1 EL
2 ELA's
2 ELA's
10 EL's, 10 ELA's, 1 PL, 3
PLA's
1 EL, 1 ELA
4 ELA's
1 ELA
1 EL
2 PL's, 1 MLA
1 EL
1 EL
1 EL, 1 ELA
1 EL
2 EL's
1 EL
3 ELA's
1 EL
7 EL's, 3 L's, 3 ML's, 8 PL's
1 EL
1 EL, 2 ELA's
1 ELA
1 EL
ALICE DOWNS
AU-7 MILE HILL
AU-BALAGUNDI
AU-CAROSUE
AU-JILLEWARRA
AU-MT WELD
AU-RANDALS
AU-RUBY WELL
BARDOC
BIG BEN-ALICE HILL
BOOLALOO
COSMO NEWBERRY
EDJUDINA
FE-BLUE BUSH WELL
FE-EARAHEEDY
FE-ETHEL CREEK
FE-HAMERSLEY
FE-HIGH RANGE
FE-HILLSIDE
FE-KANGEENARINA
FE-MARILLANA
FE-MOORINE ROCKS
FE-MT GOULD
FE-MT WALKINS
FE-MT. STUART
FE-MULGA DOWNS
FE-NEWMAN NTH
FE-NOREENA DOWNS
FE-PARKER RANGE
FE-PINARRA WELL
FE-ROCKLEA
FE-ROY HILL
FE-STRAWBERRY ROCKS
FE-TOODYAY
FE-TURNER RIVER
FE-YALLEEN
GOLDEN RIDGE
IOCG-POLLOCK HILL
IOCG-WEBB
JUNCTION
KALGOORLIE
KOOLYANOBBING
LAKEWAY
1 EL
1 ELA
1 ELA
1 PL
1 EL, 1 ELA
1 EL, 1 ELA
1 ELA
9 PLA's
1 EL
1 ELA
1 EL, 1 ELA MAGELLEN
1 ELA
1 EL
2 EL's
MOONARGIDDING
MT RANKIN
NEBO
1 EL
1 ELA
1 ELA
1 EL
1 ELA
1 ELA
1 ELA
1 MLA, 7
PL's
1 ELA
1 PL
1 EL
1 EL
1 EL
1 ELA
1 EL
1 ELA
2 EL's
1 PL
1 ELA
NT-ACACIA BORE
NT-BALMA GROUP
NT-DAVENPORT
NT-MT ISABEL
NT-MT RIGG
NT-ROPER GROUP
NT-WAUCHOPE
QUARTZ CIRCLE
SOUTHERN CROSS
TEN MILE WELL
UR-BIDGEMIA
UR-HINKLER WELL
UR-JAILOR BORE
UR-LEOPOLD DOWNS
UR-PELLS RANGE
UR-RAWLINSON RANGE
U-YEELIRRIE
VETTERSBURG
YAMARNA
Notes: EL = Granted Exploration Licence MLA = Mining Lease Application M = Granted Mining Lease
ELA= Exploration Licence Application P = Granted Prospecting Licence PLA =
74